Structural accounting: an empirical assessment of cross-country differences in productivity

Dario Diodato

No 2020, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: This paper proposes a method to decompose cross-country differences in productivity (TFP) into a technological component - depending on the overall productivity of a country - and an allocation component, which depends on whether factors of productions are allocated to productive or unproductive industries. Using a sample of over 2 million fims from 30 countries, the analysis estimates that 1/4 of inequality between countries is due to the Composition effect, while 3/4 to the Place effect. Moreover, once accounting for heterogeneity at the subnational level, I find that the Composition effect may be as high as 50%.

Keywords: total factor productivity; factor allocation; structural change (search for similar items in EconPapers)
JEL-codes: O14 O33 O47 (search for similar items in EconPapers)
Date: 2020-04, Revised 2020-04
New Economics Papers: this item is included in nep-eff and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:egu:wpaper:2020

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