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Why do some countries produce so much more output per worker than others? - A note

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Author Info
Boyle, Gerry (National University of Ireland Maynooth)
McQuinn, Kieran (Central Bank and Financial Services Authority of Ireland)

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Abstract

In an important paper, Hall and Jones (1999) show that international differences in output per worker across 127 countries in 1988 are fundamentally determined by variations in, what they term, a country's ``social infrastructure''. This paper conducts a robustness check of their findings by implementing a testing framework that is radically different to their approach. Specifically, we estimate a stochastic, rather than a deterministic, production frontier and we also model the potential role of social infrastructure in explaining productivity in a single step, rather than the statistically unsatisfactory two-step method used by Hall and Jones. We obtain two important findings that are strongly supportive of Hall and Jones' results. First, the bulk of inter-country variation in output per worker is accounted for by differences in productivity. Second, social infrastructure is found to be a highly significant variable in explaining inter-country productivity differences.

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Paper provided by Central Bank & Financial Services Authority of Ireland (CBFSAI) in its series Research Technical Papers with number 9/RT/04.

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Length: 12 pages
Date of creation: Dec 2004
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Handle: RePEc:cbi:wpaper:9/rt/04

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Find related papers by JEL classification:
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Koop, Gary & Osiewalski, Jacek & Steel, Mark F J, 2000. "Modeling the Sources of Output Growth in a Panel of Countries," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(3), pages 284-99, July.
  4. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  5. Battese, George E. & Corra, Greg. S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December. [Downloadable!]
  6. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June. [Downloadable!] (restricted)
  7. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. [Downloadable!] (restricted)
  8. Koop, Gary & Osiewalski, Jacek & Steel, Mark F J, 1999. " The Components of Output Growth: A Stochastic Frontier Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(4), pages 455-87, November. [Downloadable!] (restricted)
  9. Richard Kneller & Philip Andrew Stevens, 2002. "The Role of Efficiency as an Explanation of International Income Differences," NIESR Discussion Papers 205, National Institute of Economic and Social Research. [Downloadable!]
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  1. Krishna G. Iyer & Alicia N. Rambaldi & Kam Ki Tang, 2008. "Efficiency externalities of trade and alternative forms of foreign investment in OECD countries," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 749-766. [Downloadable!]
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