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Comparing Australian and United States productivity

Author Info

Listed author(s):
  • Jyoti Rahman

    (Treasury, Government of Australia)

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    Abstract

    Despite a series of broad and deep macroeconomic and microeconomic reforms boosting Australia's productivity growth, the level of Australia’s GDP per capita remains well below that of the United States. A continuing gap in the levels of productivity plays a central role in explaining Australia’s GDP per capita relative to the US. This paper reviews various explanations for the Australia-US productivity gap and finds that the productivity gap can at least in part be explained by a combination of: differences in human capital as represented by educational attainment; differences in product and labour market policies; and the geographic and historical context in which the Australian economy operates. Differences in physical capital per worker and industry structures do not appear to be primary explanations for the productivity gap.

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    File URL: http://archive.treasury.gov.au/documents/987/PDF/04_comparing_productivity.pdf
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    Article provided by The Treasury, Australian Government in its journal Economic Roundup.

    Volume (Year): (2005)
    Issue (Month): 2 (June)
    Pages: 27-45

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    Handle: RePEc:tsy:journl:journl_tsy_er_2005_2_2
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    Web page: http://www.treasury.gov.au
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    Keywords: gross domestic product; human capital; microeconomics; productivity;

    Find related papers by JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    References listed on IDEAS
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    1. Paul Conway & Véronique Janod & Giuseppe Nicoletti, 2005. "Product Market Regulation in OECD Countries: 1998 to 2003," OECD Economics Department Working Papers 419, OECD Publishing.
    2. Andrea Bassanini & Stefano Scarpetta, 2001. "Does Human Capital Matter for Growth in OECD Countries?: Evidence from Pooled Mean-Group Estimates," OECD Economics Department Working Papers 282, OECD Publishing.
    3. Ian W. McLean & Alan M. Taylor, 2001. "Australian growth: a California perspective," Pacific Basin Working Paper Series 2001-06, Federal Reserve Bank of San Francisco.
    4. Alan Winters, L. & Martins, Pedro M. G., 2004. "When comparative advantage is not enough: business costs in small remote economies," World Trade Review, Cambridge University Press, vol. 3(03), pages 347-383, November.
    5. Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1181-1222, December.
    6. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    7. C.J. Krizan & John Haltiwanger & Lucia Foster, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," Working Papers 02-18, Center for Economic Studies, U.S. Census Bureau.
    8. Robert J. Gordon, 2004. "Why was Europe Left at the Station When America's Productivity Locomotive Departed?," NBER Working Papers 10661, National Bureau of Economic Research, Inc.
    9. Lewis Evans and Patrick Hughes, 2003. "Competition Policy in Small Distant Open Economies: Some Lessons from the Economics Literature," Treasury Working Paper Series 03/31, New Zealand Treasury.
    10. Robert Ewing & Bryn Battersby, 2005. "Measuring recent trends in Australia’s economic remoteness," Economic Roundup, The Treasury, Australian Government, issue 1, pages 21-31, March.
    11. Bryn Battersby, 2007. "Does distance matter?: The effect of geographic isolation on productivity levels," OECD Economic Studies, OECD Publishing, vol. 2006(1), pages 205-225.
    12. Stephen Redding & Anthony J. Venables, 2002. "The Economics of Isolation and Distance," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 28, pages 93-108.
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    Cited by:

    1. Gregory, Robert G., 2012. "Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), June.
    2. Evans, Lewis, 2009. "Capital Market Integration: The Structure of the New Zealand Economy and its Capital Markets," Working Paper Series 4035, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    3. Ben Dolman & Lan Lu & Jyoti Rahman, 2006. "Understanding productivity trends," Economic Roundup, The Treasury, Australian Government, issue 1, pages 35-52, March.
    4. Gene Tunny, 2006. "Educational attainment in Australia," Economic Roundup, The Treasury, Australian Government, issue 2, pages 1-9, May.
    5. Dean Parham, 2005. "Is Australia’s Productivity Surge Over?," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 12(3), pages 253-266.

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