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The Europe-U.S. Retail Trade Productivity Gap in a Rear-view Mirror

  • Harchaoui, Tarek M.

    (Groningen University)

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    Is the Europe-U.S. retail trade productivity gap a genuine phenomenon or the result of a variety of measurement issues? This research question, which raised concerns during most of the decade preceding the Great Recession, has two primary motivations. First, I hope to gain a better understanding of the Europe-U.S. market economy productivity gap, attributable almost solely to the retail trade sector. In particular, the goal is to answer the perplexing question that remains stubbornly relevant: ?Can measurement errors, including those that arise from offshoring, explain all, some, or none of the productivity gap in this sector?? Second, this paper is about more than measurement differences. It also asks how much of the measured gap is attributable to transatlantic differences in economic structures such as scale economies. With a harmonized measure of real output, the post-1995 period now reports a 0.5 percentage point productivity gap in favour of the U.S., down from the ?official? 1.2 percentage points. This new gap is further downgraded to one-third of a percentage point as a result of a counterfactual experiment that asks what would productivity performance look like had the quantitative analysis accounted for differences in economic structures between the two economies. The productivity gap in favour of the U.S. retail trade sector still holds albeit with a modest order of magnitude.

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    File URL: http://irs.ub.rug.nl/ppn/356388387
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    Paper provided by Groningen Growth and Development Centre, University of Groningen in its series GGDC Research Memorandum with number GD-127.

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    Date of creation: 2012
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    Handle: RePEc:dgr:rugggd:gd-127
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    1. Emek Basker & Pham Hoang Van, 2005. "Putting a Smiley Face on the Dragon: Wal-Mart as Catalyst to U.S.-China Trade," Working Papers 0506, Department of Economics, University of Missouri, revised 07 Oct 2005.
    2. Haskel, Jonathan & Sadun, Raffaella, 2009. "Regulation and UK Retailing Productivity: Evidence from Micro Data," IZA Discussion Papers 4028, Institute for the Study of Labor (IZA).
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    4. Emek Basker & Pham Hoang Van, 2010. "Imports "Я" Us: Retail Chains as Platforms for Developing-Country Imports," American Economic Review, American Economic Association, vol. 100(2), pages 414-18, May.
    5. repec:cup:cbooks:9780521453455 is not listed on IDEAS
    6. Martin Neil Baily & Robert M. Solow, 2001. "International Productivity Comparisons Built from the Firm Level," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 151-172, Summer.
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    9. Galina Hale & Bart Hobijn, 2011. "The U.S. content of “Made in China”," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug8.
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    14. Robert C. Feenstra & Robert E. Lipsey & Lee G. Branstetter & C. Fritz Foley & James Harrigan & J. Bradford Jensen & Lori Kletzer & Catherine Mann & Peter K. Schott & Greg C. Wright, 2010. "Report on the State of Available Data for the Study of International Trade and Foreign Direct Investment," NBER Working Papers 16254, National Bureau of Economic Research, Inc.
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