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Explaining the gaps in labour productivity in some developed countries

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Author Info
Razzak, Weshah

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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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1888.

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Date of creation: Feb 2005
Date of revision: May 2006
Handle: RePEc:pra:mprapa:1888

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Related research
Keywords: Labour Productivity; TFP; Real exchange rate;

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Find related papers by JEL classification:
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation

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Cited by:
(explanations, 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. Razzak, Weshah, 2008. "On The dynamic of search, matching and productivity in New Zealand and Australia," MPRA Paper 8262, University Library of Munich, Germany. [Downloadable!]
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