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February 1, 1999The Quarterly Journal of Economics

Why do Some Countries Produce So Much More Output Per Worker than Others?

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Authors

RHRobert E. HallHoover InstitutionCJC. I. JonesLancaster University

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Implication

Empirical analysis reveals that social infrastructure drives output per worker across countries, indicating that institutions and policies fundamentally dictate economic productivity.

Key Points

  • To determine why output per worker varies substantially across countries and identify the underlying drivers of cross-country productivity differences.
  • Conducted a development accounting analysis to assess the relative contributions of physical capital and educational attainment to output per worker.
  • Treated social infrastructure—institutions and government policies—as an endogenous variable shaped historically by geography and language.
  • Differences in physical capital and educational attainment account for only a fraction of the cross-country variation in output per worker, leaving large disparities in the Solow residual.
  • Differences in capital accumulation, total factor productivity, and overall output per worker are primarily driven by variations in social infrastructure.

Cite This Study

Hall et al. (1999) studied this question.

synapsesocial.com/papers/6943bf3875b87f5f277851d4https://doi.org/10.1162/003355399555954
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