PRODUCTIVITY CONVERGENCE ACROSS INDUSTRIES AND COUNTRIES: THE IMPORTANCE OF THEORY-BASED MEASUREMENT

Robert Inklaar and Marcel Timmer

Macroeconomic Dynamics, 2009, vol. 13, issue S2, 218-240

Abstract: Cross-country studies of economic growth have been hampered by the scarcity of reliable data on productivity at the industry level; see Bernard and Jones [American Economic Review, 91 (4) (2001), 1168–1169] and Rogerson [Journal of Political Economy, 116 (2) (2008), 235–259]. We bring together literature on industry prices, human capital, and capital assets to construct industry-level productivity measures that are well grounded in neoclassical production theory. These theory-based measures differ widely from the crude measures commonly used in the literature. We use these to confirm and strengthen the finding of Bernard and Jones [American Economic Review, 86 (5) (1996), 1216–1238] that for advanced OECD countries, patterns of convergence across sectors have differed since 1970: whereas productivity in market services converged, there is no convergence in manufacturing. More detailed analysis confirms that patterns of convergence are highly industry-specific. There is no dominant convergence trend in sectoral productivity growth across advanced countries.

Date: 2009
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Related works:
Chapter: Productivity Convergence Across Industries and Countries: The Importance of Theory-based Measurement (2012)
Working Paper: Productivity Convergence Across Industries and Countries: The Importance of Theory-based Measurement (2009)
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