Sectoral decomposition of convergence in labor productivity: a re-examination from a new dataset

This paper investigates how the sector-specific source or the changing sectoral composition of labor productivity has contributed to $$\beta $$ β -convergence, using a newly constructed eight-sector database. Compared with the literature decomposing convergence, it employs a large and diverse sample of countries. The main findings are twofold. First, both sector-specific and sectoral reallocation have become important drivers of $$\beta $$ β -convergence in labor productivity. Second, looking across the sectors, agricultural productivity growth has been a significant contributor to $$\beta $$ β -convergence, whereas most other sectors have not contributed to overall convergence. Our result is in line with the literature that illustrates that the increase in agricultural productivity has a larger poverty-reduction effect than increases in other sectors.