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Sectoral and Skill Contributions to Labor Productivity in Asia

Author

Listed:
  • Helble, Matthias

    (Asian Development Bank Institute)

  • Long, Trinh

    (Asian Development Bank Institute)

  • Le, Trang

    (Asian Development Bank Institute)

Abstract

Using a decomposition approach on data collected by the Asian Productivity Organization (APO) as well as World Input-Output data, we show that in most Asian economies the services sector makes the largest contribution to labor productivity. Furthermore, we find evidence of a major reallocation of labor from agriculture directly to services, bypassing the manufacturing sector. This finding challenges the traditional view that countries in their economic development need to have their workforce employed first in manufacturing before switching to services. Lastly, the paper studies how different skill levels contribute to labor productivity growth. We find that high-skilled workers have contributed most to overall labor productivity growth in developing Asia. In services, high-skilled workers have mainly driven labor productivity, indicating that upskilling and training are instrumental in services-led development.

Suggested Citation

  • Helble, Matthias & Long, Trinh & Le, Trang, 2019. "Sectoral and Skill Contributions to Labor Productivity in Asia," ADBI Working Papers 929, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0929
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    References listed on IDEAS

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    1. Jianmin Tang & Weimin Wang, 2004. "Sources of aggregate labour productivity growth in Canada and the United States," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(2), pages 421-444, May.
    2. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
    3. Dani Rodrik, 2016. "Premature deindustrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 1-33, March.
    4. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    5. Fernández, Rafael & Palazuelos, Enrique, 2018. "Measuring the role of manufacturing in the productivity growth of the European economies (1993–2007)," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 1-12.
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    Cited by:

    1. Alistair Dieppe, 2021. "Global Productivity," World Bank Publications - Books, The World Bank Group, number 34015, December.

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    More about this item

    Keywords

    labor productivity; manufacturing; services; skills;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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