Single-Factor Productivity in OECD Countries
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Publication date: 2009-09-30
GNPJE 2009;234(9):23-47
The paper aims to determine the single-factor productivity (SFP) of capital and labor in 20 member countries of the Organization for Economic Cooperation and Development (OECD) in 1970-2000. Calculated with the use of a parametric method based onnested constant-elasticity-of-substitution (CES) production functions,the SFP values are used to deal with three research issues: (1) determine the distribution of SFP among countries; (2) compare SFP between individual OECD countries and the United States in 2000 (such an analysis makes it possible to identify which factors are especially efficiently/inefficiently used in production by which countries); (3) conduct a dynamic analysis to check how the SFP of individual factors evolved in the analyzed countries in 1970-2000. The results obtained show that the key advantage of the United States over other OECD countries analyzed in terms of total factor productivity is based on a different level of endowment with individual production factors, specifically physical and human capital. Second, an increased SFP for skilled labor was the main factor (alongside factor accumulation) behind an increase in productivity in OECD countries in 1970-2000. In most countries, especially Japan, the SFP of capital also increased. The SFP of unskilled labor, on the other hand, decreased considerably, the authors note.
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