IDEAS home Printed from https://ideas.repec.org/a/kap/jproda/v63y2025i2d10.1007_s11123-024-00738-y.html
   My bibliography  Save this article

Club convergence in regional labor productivity: how do Australian states and territories compare to the US, UK, and Canadian subnational regions?

Author

Listed:
  • Omphile Temoso

    (University of New England)

  • Isaac Koomson

    (The University of Queensland)

  • Buyani Thomy

    (Charles Sturt University)

Abstract

Developing strategies to enhance productivity growth requires identifying leading and lagging regions, industries, and growth drivers. However, there are limited cross-country studies using subnational data. Our study goes beyond the traditional country convergence approach and estimates labor productivity convergence using Philips and Sul’s club convergence approach and subnational data from 2004 to 2020. We aim to determine whether labor productivity growth rates in Australian states and territories are equal, converging, or divergent as compared to United States, United Kingdom, and Canadian subnational regions. The results show that five Australian jurisdictions, including Western Australia and New South Wales, are in the high labor productivity group (Club 1), while the remaining three i.e., Australian Capital Territory, Victoria, and Queensland, are in the moderate growth group (Club 2). We also used fixed effects models with least squares dummy variable estimators to identify the club’s characteristics. The results show that regions with a high proportion of employees in information and communications technology, energy, mining, and resources experienced higher labor productivity growth than those with a manufacturing sector. Human capital, innovation, and household disposable income were associated with high labor productivity, whereas high old-age dependency and children-to-women ratios were associated with lower growth. These results are consistent with the macroeconomic phenomenon that economic development leads to inequality and polarization in certain regions of a country. Nonetheless, the findings are useful for decision-makers and researchers to use in benchmarking and improving regional strategies by identifying regional peers and factors that influence convergence or divergence that can be improved. The results provide insightful findings for consideration by policymakers seeking to boost labor productivity or to bridge regional gaps in productivity.

Suggested Citation

  • Omphile Temoso & Isaac Koomson & Buyani Thomy, 2025. "Club convergence in regional labor productivity: how do Australian states and territories compare to the US, UK, and Canadian subnational regions?," Journal of Productivity Analysis, Springer, vol. 63(2), pages 133-149, April.
  • Handle: RePEc:kap:jproda:v:63:y:2025:i:2:d:10.1007_s11123-024-00738-y
    DOI: 10.1007/s11123-024-00738-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11123-024-00738-y
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s11123-024-00738-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Julie Le Gallo & Sandy Dall’erba, 2006. "Evaluating the Temporal and Spatial Heterogeneity of the European Convergence Process, 1980–1999," Journal of Regional Science, Wiley Blackwell, vol. 46(2), pages 269-288, May.
    2. Frank Corvers, 1997. "The impact of human capital on labour productivity in manufacturing sectors of the European Union," Applied Economics, Taylor & Francis Journals, vol. 29(8), pages 975-987.
    3. Mildred E Warner & Yuanshuo Xu, 2021. "Productivity divergence: state policy, corporate capture and labour power in the USA," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 14(1), pages 51-68.
    4. Marinella Terrasi, 1999. "Convergence and divergence across Italian regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 33(4), pages 491-510.
    5. Kerstin Enflo & Per Hjertstrand, 2009. "Relative Sources of European Regional Productivity Convergence: A Bootstrap Frontier Approach," Regional Studies, Taylor & Francis Journals, vol. 43(5), pages 643-659.
    6. Peter Gal & Jagoda Egeland, 2018. "Reducing regional disparities in productivity in the United Kingdom," OECD Economics Department Working Papers 1456, OECD Publishing.
    7. Peter C. B. Phillips & Donggyu Sul, 2009. "Economic transition and growth," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1153-1185.
    8. David Bloom & David Canning & Günther Fink & Jocelyn Finlay, 2009. "Fertility, female labor force participation, and the demographic dividend," Journal of Economic Growth, Springer, vol. 14(2), pages 79-101, June.
    9. Dan Andrews & David Hansell, 2021. "Productivity‐Enhancing Labour Reallocation in Australia†," The Economic Record, The Economic Society of Australia, vol. 97(317), pages 157-169, June.
    10. Konrad Lyncker & Rasmus Thoennessen, 2017. "Regional club convergence in the EU: evidence from a panel data analysis," Empirical Economics, Springer, vol. 52(2), pages 525-553, March.
    11. Peter C. B. Phillips & Donggyu Sul, 2007. "Transition Modeling and Econometric Convergence Tests," Econometrica, Econometric Society, vol. 75(6), pages 1771-1855, November.
    12. Barrios, Candelaria & Flores, Esther, 2019. "Club convergence in innovation activity across European regions," MPRA Paper 123486, University Library of Munich, Germany.
    13. Kong, Jianning & Phillips, Peter C.B. & Sul, Donggyu, 2019. "Weak σ-convergence: Theory and applications," Journal of Econometrics, Elsevier, vol. 209(2), pages 185-207.
    14. Carlos Mendez, 2020. "Convergence Clubs in Labor Productivity and its Proximate Sources," SpringerBriefs in Economics, Springer, number 978-981-15-8629-3, September.
    15. Ivanovski, Kris & Awaworyi Churchill, Sefa & Smyth, Russell, 2018. "A club convergence analysis of per capita energy consumption across Australian regions and sectors," Energy Economics, Elsevier, vol. 76(C), pages 519-531.
    16. Carlos Mendez, 2020. "Convergence Clubs in Labor Productivity," SpringerBriefs in Economics, in: Convergence Clubs in Labor Productivity and its Proximate Sources, chapter 0, pages 33-39, Springer.
    17. Candelaria Barrios & Esther Flores & M. Ángeles Martínez, 2019. "Club convergence in innovation activity across European regions," Papers in Regional Science, Wiley Blackwell, vol. 98(4), pages 1545-1565, August.
    18. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    19. Nilgun Yavuz & Veli Yilanci, 2013. "Convergence in Per Capita Carbon Dioxide Emissions Among G7 Countries: A TAR Panel Unit Root Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(2), pages 283-291, February.
    20. Juan R. Cuadrado-Roura & TomÂs Mancha-Navarro & RubÊn Garrido-Yserte, 2000. "Regional productivity patterns in Europe: An alternative approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(3), pages 365-384.
    21. Kris Ivanovski & Sefa Awaworyi Churchill & John Inekwe, 2020. "Convergence in Income Inequality Across Australian States and Territories," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 148(1), pages 127-142, February.
    22. Stilianos Alexiadis & Konstantinos Eleftheriou & Peter Nijkamp, 2021. "Club convergence of per capita disposable income in the United States," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1565-1580, October.
    23. Julián Ramajo & Geoffrey J. D. Hewings, 2018. "Modelling regional productivity performance across Western Europe," Regional Studies, Taylor & Francis Journals, vol. 52(10), pages 1372-1387, October.
    24. Kerui Du, 2017. "Econometric convergence test and club clustering using Stata," Stata Journal, StataCorp LLC, vol. 17(4), pages 882-900, December.
    25. Bhattacharya, Mita & Inekwe, John N. & Sadorsky, Perry, 2020. "Convergence of energy productivity in Australian states and territories: Determinants and forecasts," Energy Economics, Elsevier, vol. 85(C).
    26. Amjad Naveed & Nisar Ahmad, 2016. "Labour productivity convergence and structural changes: simultaneous analysis at country, regional and industry levels," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-17, December.
    27. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Uğur Ursavaş & Carlos Mendez, 2023. "Regional income convergence and conditioning factors in Turkey: revisiting the role of spatial dependence and neighbor effects," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 71(2), pages 363-389, October.
    2. Anang Budi Gunawan & Carlos Mendez & Shigeru Otsubo, 2021. "Provincial income convergence clubs in Indonesia: Identification and conditioning factors," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2540-2575, December.
    3. Harry Aginta, 2021. "Spatial dynamics of consumer price in Indonesia: convergence clubs and conditioning factors," Asia-Pacific Journal of Regional Science, Springer, vol. 5(2), pages 427-451, June.
    4. Cutrini, Eleonora & Mendez, Carlos, 2023. "Convergence clubs and spatial structural change in the European Union," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 167-181.
    5. Gulati, Rachita, 2022. "Bank ownership and governance quality in India: Evolution and detection of convergence clubs," The North American Journal of Economics and Finance, Elsevier, vol. 62(C).
    6. Mateusz Tomal, 2024. "A review of Phillips‐Sul approach‐based club convergence tests," Journal of Economic Surveys, Wiley Blackwell, vol. 38(3), pages 899-930, July.
    7. Payne, James E. & Saunoris, James W. & Nazlioglu, Saban & Smyth, Russell, 2024. "Renewable energy production across U.S. states: Convergence or divergence?," Energy Economics, Elsevier, vol. 140(C).
    8. Diego Aboal & Bibiana Lanzilotta & Martin Pereyra & Maria Paz Queraltó, 2020. "Regional Economic Development and Convergence Clubs in Uruguay," Documentos de Trabajo 17902, The Latin American and Caribbean Economic Association (LACEA).
    9. Linda Glawe & Helmut Wagner, 2021. "Divergence Tendencies in the European Integration Process: A Danger for the Sustainability of the E(M)U?," JRFM, MDPI, vol. 14(3), pages 1-22, March.
    10. Feng Li & Guangdong Li & Weishan Qin & Jing Qin & Haitao Ma, 2018. "Identifying Economic Growth Convergence Clubs and Their Influencing Factors in China," Sustainability, MDPI, vol. 10(8), pages 1-21, July.
    11. Linda Glawe & Carlos Mendez, 2023. "Schooling Ain’t Learning in Europe: A Club Convergence Perspective," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(2), pages 324-361, June.
    12. Saadet Kasman & Adnan Kasman, 2021. "Convergence in obesity and overweight rates across OECD countries: evidence from the stochastic and club convergence tests," Empirical Economics, Springer, vol. 61(2), pages 1063-1096, August.
    13. Mitsuhiko Kataoka & Al-Ikram Taupan Darangina, 2023. "Imperial Manila syndrome in poverty reduction: a province-level spatial distribution analysis," Asia-Pacific Journal of Regional Science, Springer, vol. 7(1), pages 1-28, March.
    14. Taştan, Hüseyin & Yıldız, Hakan, 2023. "Club convergence analysis of city-level electricity consumption in Turkey," Energy, Elsevier, vol. 265(C).
    15. Rughoo, Aarti & You, Kefei, 2016. "Asian financial integration: Global or regional? Evidence from money and bond markets," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 419-434.
    16. Montañés, Antonio & Olmos, Lorena & Reyes, Marcelo, 2016. "Does crisis affect convergence process? The case of the Spanish provinces," MPRA Paper 69543, University Library of Munich, Germany.
    17. Nicholas Apergis & Francisco J. Delgado & Claudia Suárez‐Arbesú, 2025. "Inequality and poverty in Spain: Insights from a regional convergence analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 1707-1723, April.
    18. Syed Abul, Basher & Jobaida, Behtarin & Salim, Rashid, 2022. "Convergence across Subnational Regions of Bangladesh – What the Night Lights Data Say?," MPRA Paper 111963, University Library of Munich, Germany.
    19. Charles Shaaba Saba & Oladipo Olalekan David, 2023. "Identifying Convergence in Telecommunication Infrastructures and the Dynamics of Their Influencing Factors Across Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1413-1466, June.
    20. Haupt, Harry & Schnurbus, Joachim & Semmler, Willi, 2018. "Estimation of grouped, time-varying convergence in economic growth," Econometrics and Statistics, Elsevier, vol. 8(C), pages 141-158.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:63:y:2025:i:2:d:10.1007_s11123-024-00738-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.