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Explaining the gaps in labour productivity in some developed countries

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  • Razzak, Weshah

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.

Suggested Citation

  • Razzak, Weshah, 2005. "Explaining the gaps in labour productivity in some developed countries," MPRA Paper 1888, University Library of Munich, Germany, revised May 2006.
  • Handle: RePEc:pra:mprapa:1888
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Razzak, Weshah, 2013. "An Empirical Study of Sectoral-Level Capital Investments in New Zealand," MPRA Paper 52461, University Library of Munich, Germany.
    2. Razzak, W.A., 2007. "Explaining The Gaps In Labour Productivity In Some Developed Countries: New Zealand, Australia, The United States And Canada, 1988-2004," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(2).
    3. Laabas, Belkacem & Weshah, Razzak, 2011. "Economic Growth and The Quality of Human Capital," MPRA Paper 28727, University Library of Munich, Germany.
    4. Iris Mihai, 2014. "Reconsidering Economic Productivity," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 176-180, December.
    5. Razzak, Weshah, 2008. "On The dynamic of search, matching and productivity in New Zealand and Australia," MPRA Paper 8262, University Library of Munich, Germany.

    More about this item

    Keywords

    Labour Productivity; TFP; Real exchange rate;

    JEL classification:

    • O57 - Economic Development, Innovation, 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; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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