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Polarization of the worldwide distribution of productivity

Author

Listed:
  • Oleg Badunenko
  • Daniel Henderson
  • R. Russell
Abstract
We employ data envelopment analysis (DEA) methods to construct the world production frontier, which is in turn used to decompose (labor) productivity growth into components attributable to technological change (shift of the production frontier), efficiency change (movements toward or away from the frontier), physical capital deepening, and human capital accumulation over the 1965–2007 period. Using this decomposition, we provide new findings on the causes of polarization (the emergence of bimodality) and divergence (increased variance) of the world productivity distribution. First, unlike earlier studies, we find that efficiency change is the unique driver of the emergence of a second (higher) mode. Second, while earlier studies attributed the overall change in the distribution exclusively to physical capital accumulation, we find that technological change and human capital accumulation are also significant factors explaining this change in the distribution (most notably the emergence of a long right-hand tail). Robustness exercises indicate that these revisions of earlier findings are attributable to the addition of (more recent) years and a much greater number of countries included in our sample. We also check to see whether our results are changed by a correction for the downward bias in the DEA construction of the frontier, concluding that these corrections affect none of our major findings (essentially because the level correction roughly washes out in changes.) Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Oleg Badunenko & Daniel Henderson & R. Russell, 2013. "Polarization of the worldwide distribution of productivity," Journal of Productivity Analysis, Springer, vol. 40(2), pages 153-171, October.
    • Handle: RePEc:kap:jproda:v:40:y:2013:i:2:p:153-171
    DOI: 10.1007/s11123-012-0328-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Dispersion; Growth; Data envelopment analysis; Nonparametric; Polarization; Production Frontier; C14; O57; N10;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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