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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, G.E. () (Economics Dept, NUI Maynooth)
McQuinn, K. (Central Bank of Ireland)

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Abstract

In an important paper. Hal! 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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Publisher Info
Paper provided by Department of Economics, Finance and Accounting, National University of Ireland - Maynooth in its series Economics, Finance and Accounting Department Working Paper Series with number n1331103.

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Length: 10 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:may:mayecw:n1331103

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Postal: Maynooth, Co. Kildare
Phone: 353-1-7083728
Fax: 353-1-7083934
Web page: http://www.may.ie/academic/economics/
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Related research
Keywords: Productivity; Social Infrastructure; Stochastic Production Frontier.;

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Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General

References listed on IDEAS
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  1. 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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  2. 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.
  3. 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!]
  4. 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)
  5. 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!]
  6. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. 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.
  8. 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)
  9. 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)
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Cited by:
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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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