Labour Productivity Convergence Research Articles

Labor Productivity Convergence among Eurozone Member Countries

This paper analyzes the evolution of labor productivity among the Eurozone’s member countries between 1999 and 2019, using a dynamic panel estimate. The main findings indicate that, since the adoption of the single currency in 1999, both productivity per worker and productivity per hour followed different routes among Eurozone countries. Convergence among the founding countries stagnated after 2008, probably because of the Global Financial Crisis (GFC). But in the countries that joined the Eurozone several years after its creation, convergence did not slow down; indeed, towards the end of the period, the convergence of labor productivity among new entrants did not slow down. This paper focuses on measuring convergence in labor productivity and should be continued with a diagnosis of the likely causes of its stagnation. In this sense, it opens a line of research whose findings will contribute to the design of international integration policy between regions.

Catch-Up Growth and Inter-industry Productivity Spillovers: Evidence from Trade Data

Abstract Where and when does export-led growth work? This paper estimates the importance of inter-industry productivity spillovers for the export-led growth of developing countries. My empirical strategy is based on a standard quantitative trade model that features sector-level gravity in trade flows. Applying the framework to four decades of trade data, I find clear evidence of spillovers, which are larger for skill-intensive sectors. The estimates imply that patterns of sectoral specialization play a quantitatively important role in accounting for the slow convergence of labor productivity in tradable sectors. Quantitative exercises suggest that export-led growth works for poorer countries with an initial comparative advantage in manufacturing, as these countries can use foreign demand from richer countries to reallocate labor towards sectors with high spillovers.

Spatial spillovers and labor productivity convergence in Canada

We analyze labor productivity convergence between and within Canadian provinces by incorporating a spatial lag in a standard empirical neoclassical growth model. Results point to the predominance of inter-sectoral spillover effects. Furthermore, ignoring spatial effects yields smaller convergence estimates.

Convergence heterogeneity at the local level in sub‐Saharan Africa

AbstractThis paper tests for convergence in labour productivity at the local level in 10 sub‐Saharan countries, disaggregated into 1136 administrative entities. This work combines nighttime lights data and a unique set of population censuses to produce local measures of growth, employment and sectoral shares. We find evidence of unconditional convergence across sectors in the range of 2%. However, convergence is heterogeneous and conditional on both manufacturing and services employment shares. Convergence is also associated with proximity to the main city, moderate population density, low land suitability and relatively moderate temperature. Finally, the within effect dominates the between effect.

Productive efficiency, structural change, and catch-up within Africa

This paper studies the dynamics of labor productivity convergence and technology catch-up within Africa, shedding light on two important and inter-related issues that are central to Africa’s growth: (i) convergence of relative productivity among African countries and (ii) the role of technological change and technological catch-up in driving productivity change across and within African countries. We do this by using a nonparametric method to estimate an African production frontier. Productivity change in Africa is decomposed into two components: technological change and technological catch-up. Our results show that Botswana and Mauritius are the only two countries in Africa that have converged to the productivity as well as the efficiency level of the frontier. This successful convergence is driven more by technological catch-up and less by technological change. We explore the special role of technological catch-up by decomposing it into within-sector convergence, between-sector convergence and initial specialization using a structural model (Shift and Share catch-up decomposition). The results highlight the special role of structural change in closing the productivity gap with the frontier. This paper contributes to recent evidence suggesting that countries can climb up the income ladder at a faster rate through a two-pronged transformation – i.e., structural change and technological catch-up.

Regional Diversity and Evolution of Agricultural Labor Productivity in China

Analyzing the regional diversity and convergence of agricultural labor productivity is an important step in investigating this aspect of the economy. To enhance urban–rural integration, the Gini coefficient and kernel density estimation methods are used to examine regional agricultural labor productivity in China. The overall regional diversity in agricultural labor productivity is found to be expanding, with regional differences being the primary source of the overall disparity. Agricultural labor productivity in China has continued to improve over the period considered in this study. The gap between agricultural labor productivity in the eastern and western regions is found to be lower than that between the eastern and central regions and the western and central regions. Although there is no σ-convergence to agricultural labor productivity in China, both absolute and conditional β-convergence are observed. A spatial lag model indicates that agricultural labor productivity has a significant positive spillover effect. GDP per capita and the level of marketization make significant contributions to the convergence of agricultural labor productivity, and the level of industrialization significantly reduces the agricultural labor productivity gap.

Labour Productivity Convergence in the Czech Republic

Labour Productivity Convergence in the Czech Republic

Labor productivity in the agriculture, structural shifts and economic growth in the Central and Eastern European countries

Purpose. In our article, we assess the scope and directions of changes in agricultural labor productivity compared to other sectors of the economy.
 Methodology / approach. For our survey we choose 15 countries: (і) EU countries – Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, as well (іі) post-Soviet European countries – Ukraine, Moldova, Belarus, russia and also (ііі) Albania for period 1996–2019. We use an empirical methodology designed to analyze structural decomposition of labor productivity into the growth effect within the sector and structural dynamic and static effects, often called ‘shift-share analysis’. We analyze process of convergence of sectoral labor productivity and its impact on economic growth.
 Results. Labor productivity grows in the agricultural sector of the economy at the fastest rate, on average by almost 12 % per year. The growth effects within the industry takes a dominant position in all sectors of the economy in the countries of Central and Eastern Europe and its share is on average 88.5 %, and the structural effects are as follows: the dynamic effect is almost 1%, the static effect is 10.4 %. We have confirmed that the agricultural sector is gaining weight in the economic growth of the countries of Central and Eastern Europe, the influence of the service sector is increasing, although together they do not exceed the influence of the growth of value added in industry.
 Originality / scientific novelty. For the first time we have used the methodology of decomposition of labor productivity growth into three effects: growth, dynamic and static ones for the period before the financial crisis 2008 and after the crisis for 15 countries of Central and Eastern Europe. Using panel GLS estimator with fixed effects we estimate the impact of labor productivity on economic growth in different sectors for 1991–2020 period. 
 Practical value / implications. The main results of the study can be used for elaboration of effective economic policy in agriculture development in Central and Eastern European countries; for identification of structural shifts in labor productivity in different sectors of the economy before and after the financial crisis; for estimation of the level of convergence between different sectors of the economy; determining main factors of increasing value added in agriculture in Ukraine and other Central and Eastern European countries; implementation structural changes in economy in the period of crisis.

Impact of Labour Productivity Differences on Urban-Rural Integration Development and Its Spatial Effect: Evidence from a Spatial Durbin Model

Lewis’ dual economic structure theory holds that differences in labour productivity affect urban-rural integration development. Based on this theory, this paper analyses the spatial mechanism of labour productivity affecting the development of urban-rural integration. A multidimensional index system is constructed to estimate the degree of urban-rural integration development, and a spatial Durbin model is used to quantitatively analyse the spatial effect between the difference in labour productivity and the development of urban-rural integration. The results show that there is a significant positive spatial agglomeration phenomenon in urban-rural integration in the Yangtze River Economic Belt. The convergence of labour productivity will not only promote local urban-rural integration but also inhibit the urban-rural integration development of other administrative divisions, but it can still play a positive role in promoting the urban–rural integration development of the whole region. Finally, based on the above research conclusions, this paper puts forward three policy suggestions: optimizing the human capital structure, promoting rural industrial integration, and exploring the land reform system.

Industrialization and Convergence of West Java Manufacturing Labor Productivity, Indonesia

West Java as a national manufacturing center has experienced industrialization since 1989. This is marked by the continuous increase in the manufacturing sector so that it is able to shift other sectors. Unfortunately, the industrialization that occurred in West Java was not followed by a reduction in the manufacturing labor productivity in West Java. The convergence of manufacturing labor productivity in West Java is an important phenomenon because inequality can lead to a different pace of development and exacerbate inequality. This study uses dynamic panel data regression with the first-different GMM (FD-GMM) method for inferential analysis and Location Quotient (LQ), Klassen Typology and the calculation of the coefficient of variation for descriptive analysis. The results showed that only 7 out of 27 regencies/cities in West Java had the economy dominated by the manufacturing sector and there were fluctuations in the productivity of the manufacturing workforce in these areas. Based on Klassen's Typology, there are still many areas that are categorized as developing and underdeveloped areas. However, there is a decrease in inequality between regions as seen from the results of the convergence analysis. Sigma convergence and beta convergence occurred in West Java with the time needed to close half the gap (half-life convergence) of less than one year. Factors that significantly affect the convergence process of manufacturing labor productivity are the manufacturing labor productivity lag, FDI, DDI, and real wages of manufacturing workers.

Convergence in labor productivity across provinces and production sectors in China

Empirical evidence is found for the β and σ convergence towards the steady states of labor productivity across provinces and production sectors in China based on estimates of static, dynamic and quintile panel data models. The pattern of convergences is found to be asymmetric across sectors according to quantile panel regression estimations. The pattern of convergence was more obvious when controls for human capital, FDI, industrial concentration and inequality were introduced for the robustness of our analysis. While the effects of human capital and FDI on productivity convergence are asymmetric across provinces and sectors, more inequality or higher rate of industrial concentration lead to divergence either in simple or quantile panel estimations. Implications these findings are clear. Policies that promote competition and more equal distribution are better for convergence in labour productivity across provinces and sectors in China.

Sectoral Decomposition of Convergence in Labor Productivity: A Re-Examination from a New Dataset

Sectoral Decomposition of Convergence in Labor Productivity: A Re-Examination from a New Dataset

Spatial Spillovers and Labor Productivity Convergence in Canada

Spatial Spillovers and Labor Productivity Convergence in Canada

Spatial Spillovers and Labor Productivity Convergence in Canada

Spatial Spillovers and Labor Productivity Convergence in Canada

Do Productivity Laggards Ever Catch Up With Leaders?†

The paper focuses on trends in the convergence of labor and multifactor productivity in Russia. Using firm‐level data for the period 2011–2016, we show that firms with low‐productivity grow faster than those with high‐productivity. This result is, however, mostly driven by new entrants. The catch‐up momentum fades after the first few years of a firm’s life, so it is not capable of closing the gap between the most and least productive firms in the Russian economy. We show that the gap widened over the period 2011–2016, suggesting major divergence in productivity levels of Russian firms. We also use stochastic frontier analysis to verify the divergence within narrowly defined industries. Our estimates confirm divergence in most industries.

Labour productivity growth and convergence in manufacturing: A nonparametric production frontier approach

ABSTRACT Labour productivity growth in manufacturing is decomposed into technical efficiency change (movement towards or away from the frontier), technological progress (shifts in the production frontier), and capital accumulation (movement along the frontier) using a nonparametric production frontier method. The results suggest that labour productivity growth is primarily driven by capital accumulation and to a lesser extent technological progress, while technical efficiency is deteriorating over the period 1995–2014. We find that technological progress appears to be non-neutral, as the world manufacturing production frontier expands only at higher capital intensities, benefiting highly industrialized nations. We also find evidence of unconditional convergence in labour productivity for the manufacturing sector. Capital accumulation is the main driver of the observed unconditional convergence, whereas technological change is contributing to divergence rather than convergence. The findings suggest that expanding manufacturing activities through capital accumulation is essential for developing countries to catch-up with developed countries.

Collateral menus and corporate employment: Evidence from China's Property Law

We investigate whether introducing the collateral menus of liquid assets (e.g., inventory and accounts receivable) influences corporate hiring decisions. Our identification scheme treats the enactment of China's Property Law in 2007 as a quasi-natural experiment and then conducts a difference-in-differences estimation. The results show that firms with less net fixed assets hire more workers, particularly for firms with tighter financial constraints, higher labor intensity and those located in cities with stricter law enforcement, greater fiscal pressure and lower bank density. Further analysis shows that liquid assets help firms obtain more debt, save less cash, decrease the cash flow sensitivity of cash and investment and invest more in fixed assets, consistent with the collateral channel. In addition, a significant convergence of labor productivity across firms illustrates that the Property Law also has a labor reallocation effect. Our findings shed light on the importance of expanding collateral menus in maintaining employment during the COVID-19 pandemic.

Convergence in Labour Productivity in Agriculture: A Comparison Study

Convergence in Labour Productivity in Agriculture: A Comparison Study

Productivity Convergence in Manufacturing: A Hierarchical Panel Data Approach

Despite its paramount importance in the empirical growth literature, productivity convergence analysis has three problems that have yet to be resolved: (1) little attempt has been made to explore the hierarchical structure of industry-level datasets; (2) industry-level technology heterogeneity has largely been ignored; and (3) cross-sectional dependence has rarely been allowed for. This paper aims to address these three problems within a hierarchical panel data framework. We propose an estimation procedure and then derive the corresponding asymptotic theory. Finally, we apply the framework to a dataset of 23 manufacturing industries from a wide range of countries over the period 1963-2018. Our results show that both the manufacturing industry as a whole and individual manufacturing industries at the ISIC two-digit level exhibit strong conditional convergence in labour productivity, but not unconditional convergence. In addition, our results show that both global and industry-specific shocks are important in explaining the convergence behaviours of the manufacturing industries.

Convergence in Labor Productivity Across Provinces and Production Sectors in China

Convergence in Labor Productivity Across Provinces and Production Sectors in China