Explaining the gaps in labour productivity in some developed countries

MPRA Paper from University Library of Munich, Germany

Abstract: Modern economic theories explain differences in productivity and economic growth across countries by differences in political and economic institutions, and differences in culture, geographical location, policies, and laws. The success of any of these theories in explaining the gap in productivity between any two countries depends on the countries in the sample. We argue in this paper that differences in the above variables might explain gaps in economic performance between developed and developing countries, but are too small to explain the productivity gaps between developed countries. We test this hypothesis for two pairs of developed neighbouring countries: New Zealand and Australia and Canada and the United States, hence New Zealand – Australia and Canada – United States. In this paper, more than eighty percent of labour productivity gaps between New Zealand and Australia and Canada and the United States are explained by endogenous technology shocks (TFP) and capital intensities.

Keywords: Labour Productivity; TFP; Real exchange rate (search for similar items in EconPapers)
JEL-codes: C13 C32 O57 (search for similar items in EconPapers)
Date: 2005-02, Revised 2006-05
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Explaining the gaps in labour productivity in some developed countries (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1888

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