I have been playing with the labor productivity statistics from the Conference Board's Total Economy Database. Labor productivity is defined as real, PPP-adjusted GDP per person employed --using Geary-Khamis purchasing power parities. (Output per hour would be better, but many developing countries don't have data on hours.)
I smoothed the time series, country by country, using the Hodrick-Prescott filter (smoothing parameter = 100). The last data point available in the dataset is for 2013, but the last data point I use is 2010, to mitigate the end-point problem of one-sided filters such as Hodrick-Prescott.
The impression I have received lately is that productivity has stagnated or declined, but all the evidence seems to come from the U.S. or Western Europe. So the first thing I wanted to know is: Has labor productivity growth, for the world as a whole, declined?
This chart reveals Fact #1: World productivity growth has not slowed down significantly. Actually, average productivity growth was faster in 2000-2010 than in 1990-2000, although year-to-year growth seems to have plateaued in the second half of 2000-2010.
But both within developed markets and emerging markets output per worker is not growing as much as it used to. Among rich countries the deceleration is noticeable to the naked eye since the early 2000s, whereas in poorer nations the slowdown started in the mid-2000s.
This (superficial) paradox is possible, of course, because the share of emerging markets in world output has risen. So, Fact #2: World productivity growth has managed to stay constant through the 2000s because more and more output comes from emerging economies, where the level of productivity growth is higher.
Next I compare the growth of productivity of two adjacent decades: 1990-2000 and 2000-2010. This map shows the change of (the geometric average of) productivity growth from one decade to the next. Green means an acceleration of productivity. The more intense the shade of green, the larger the increase of productivity growth. Shades of orange and red indicate a decrease of productivity growth. (Click here to see a bigger map, with values.)
The map shows the change in average productivity growth, by country, from 1990-2000 to 2000-2010. Source: Total Economy Database, author's calculations, http://gunnmap.herokuapp.com/. |
Fact #3: From one decade to the next, productivity accelerated in every major emerging region, and slowed down in every major advanced region.
There is no correlation. If a country's productivity grows faster than the global average in one decade, that tells us nothing about excess productivity the next decade. If, instead, we look at excess productivity within advanced and emerging economies, the picture changes a little:
And so we have Fact #4: Within emerging economies, there is no significant persistence or reversion-to-trend of productivity growth in the long run. Within advanced economies, there is some evidence of persistent productivity growth.
Finally, I wanted to see if there appears to be unconditional convergence in productivity. This chart shows the average growth of productivity in 1990-2010 vs. the level of productivity in 1990. Unconditionally on stage of development, there is little relationship between level of productivity and subsequent productivity growth. But there are differences conditional on stage of development.
The chart shows, in the vertical axis, the average productivity growth in 1990-2010. The horizontal axis displays the log of the level of productivity in 1990. |
The chart shows, in the vertical axis, the average productivity growth in 1990-2010. The horizontal axis displays the log of the level of productivity in 1990. |
The chart shows, in the vertical axis, the average productivity growth in 1990-2010. The horizontal axis displays the log of the level of productivity in 1990. |
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