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Industry productivity and the Australia-New Zealand income gap

Author

Listed:
  • Stephenson, John

    (New Zealand Institute of Economic Research)

  • Yang, Qing

    (New Zealand Institute of Economic Research)

Abstract

Differences in productivity explain much of the growing income gap between Australia and New Zealand. Good policy responses rely on understanding the sources of these differences. Seventy percent of the aggregate gap in productivity between the two countries is due to underperformance of New Zealand’s industries rather than a difference in the industrial structure of the two countries. Our findings support the idea of studying and tackling the root causes of productivity differences at the sectoral level. The significant differences in multifactor productivity also indicate the need for more focus on the quality of labour, capital, and management, and regulatory environment.

Suggested Citation

  • Stephenson, John & Yang, Qing, 2011. "Industry productivity and the Australia-New Zealand income gap," NZIER Working Paper 2011/3, New Zealand Institute of Economic Research.
  • Handle: RePEc:ris:nzierw:2011_003
    as

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    File URL: http://nzier.org.nz/publication/industry-productivity-and-the-australia-new-zealand-income-gap-nzier-working-paper-20113
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    References listed on IDEAS

    as
    1. Julia Hall & Grant Scobie, 2005. "Capital Shallowness: A Problem for New Zealand?," Treasury Working Paper Series 05/05, New Zealand Treasury.
    2. Charles I. Jones & Paul M. Romer, 2010. "The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 224-245, January.
    3. Timmer,Marcel P. & Inklaar,Robert & O'Mahony,Mary & Ark,Bart van, 2013. "Economic Growth in Europe," Cambridge Books, Cambridge University Press, number 9781107412446, March.
    4. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
    5. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    6. Dale W. Jorgenson & Marcel P. Timmer, 2011. "Structural Change in Advanced Nations: A New Set of Stylised Facts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 1-29, March.
    7. Charles R. Hulten, 2001. "Total Factor Productivity: A Short Biography," NBER Chapters,in: New Developments in Productivity Analysis, pages 1-54 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    productivity; industry; New Zealand; Australia;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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