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Sectoral Energy- and Labour-Productivity Convergence

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Abstract

This paper empirically investigates the development of cross-country differences in energy- and labour productivity. The analysis is performed at a detailed sectoral level for 14 OECD countries, covering the period 1970–1997. A σ-convergence analysis reveals that the development over time of the cross-country variation in productivity performance differs across sectors as well as across different levels of aggregation. Both patterns of convergence as well as divergence are found. Cross-country variation of productivity levels is typically larger for energy than for labour. A β-convergence analysis provides support for the hypothesis that in most sectors lagging countries tend to catch up with technological leaders, in particular in terms of energy productivity. Moreover, the results show that convergence is conditional, meaning that productivity levels converge to country-specific steady states. Energy prices and wages are shown to positively affect energy- and labour-productivity growth, respectively. We also find evidence for the importance of economies of scale, whereas the investment share, openness and specialization play only a modest role in explaining cross-country variation in energy- and labour-productivity growth.

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Acknowledgements

We gratefully acknowledge useful and stimulating comments on earlier versions of this paper by two anonymous referees of this journal as well as by Jeroen van den Bergh, Kornelis Blok, Lucas Bretschger, Reyer Gerlagh, Ton Manders, Hein Mannaerts, Machiel Mulder, Sjak Smulders, Paul Tang, Scott Taylor, Herman Vollebergh, and (other) participants of the Monte Verità Conference on Sustainable Resource Use and Economic Dynamics. We thank Mark Koetse, Gert-Jan Linders and Simonetta Longhi for help with the econometric software. Financial support of NWO as well as the hospitality of CPB Netherlands Bureau for Economic Policy Analysis is gratefully acknowledged.

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Authors and Affiliations

  1. Gabinete de Estudos, Ministry of Planning and Development, Maputo, Mozambique

    Peter Mulder

  2. Department of Spatial Economics, Vrije Universiteit, De Boelelaan 1105, Amsterdam, 1081 HV, The Netherlands

    Peter Mulder & Henri L. F. De Groot

  3. CPB Netherlands Bureau for Economic Policy Analysis, The Hague, The Netherlands

    Henri L. F. De Groot

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  1. Peter Mulder
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  2. Henri L. F. De Groot
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Correspondence to Henri L. F. De Groot.

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Mulder, P., De Groot, H.L.F. Sectoral Energy- and Labour-Productivity Convergence. Environ Resource Econ 36, 85–112 (2007). https://doi.org/10.1007/s10640-006-9042-y

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  • DOI: https://doi.org/10.1007/s10640-006-9042-y

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