Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/71477 
Year of Publication: 
2004
Series/Report no.: 
IFS Working Papers No. 04/15
Publisher: 
Institute for Fiscal Studies (IFS), London
Abstract: 
Why have some countries done so much better than others over the recent past? In order to shed new light on this issue, this paper provides a decomposition of the change in the distribution of output-per-worker across countries over the period 1960-98. The main finding of the paper is that most of the change in shape of the world distribution of income between 1960-1998 can be accounted for by a very substantial and previously unrecognized change in the parameters driving the growth process. In particular, we show that the role of capital deepening forces - that is the role of investment rates and population growth in affecting output - increased dramatically over the period 1978-98 versus 1960-78, and that this increase can account for almost all the observed changes in the world distribution. In contrast, we do not find any significant effects coming through non-linear convergence mechanisms or increased importance of education; both of which have played prominent roles in recent discussion of economic performance. Our results therefore highlight that the period 1978-98 was particularly advantageous to countries which strongly favored capital accumulation and hence suggests that research aimed at understanding recent differences in economic performances across countries needs to focus on explaining why the social returns to physical capital accumulation where abnormally high over the period 1978-98.
Subjects: 
World Income Distribution
Cross–Country Growth
Human and Physical Capital Accumulation
Labor Force growth
JEL: 
O33
O41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
651.46 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.