Why Do Some Countries Produce so Much More Output Per Worker than Others?

51 Pages Posted: 10 Jun 2000 Last revised: 10 Dec 2022

See all articles by Robert E. Hall

Robert E. Hall

Hoover Institution and Department of Economics, Stanford University; National Bureau of Economic Research (NBER)

Charles I. Jones

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

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Date Written: June 1999

Abstract

Output per worker varies enormously across countries. Why? On an accounting basis, our analysis shows that differences in physical capital and educational attainment can only partially explain the variation in output per worker we find a large amount of variation in the level of the Solow residual across countries. At a deeper level, we document that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which we call social infrastructure. We treat social infrastructure as endogenous, determined historically by location and other factors captured in part by language.

Suggested Citation

Hall, Robert E. and Jones, Charles I., Why Do Some Countries Produce so Much More Output Per Worker than Others? (June 1999). NBER Working Paper No. w6564, Available at SSRN: https://ssrn.com/abstract=226297

Robert E. Hall (Contact Author)

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Charles I. Jones

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