Tuesday, August 26, 2014

Labor productivity comparisons

A simplified graph with the GDP per worker employed in 2013 (i.e. labor productivity) in US dollars converted to Purchasing Power Parity (PPP) is shown below.
Note that it is better than per capita income (which is more of a measure of living standards) as a measure of the economic potential of an economy, and that labor productivity avoids the pitfalls of Total Factor Productivity (TFP). The measure in PPP rather than market exchange rates distorts things a bit (but that is another issue). The graph with all the countries, and the link to the Conference Board data set here.

PS: Picture changes a little with productivity per hours worked, which is also available. For example, Norway would be slightly more productive if we used the labor productivity per hour measure.

2 comments:

  1. Ok, I'll bite. What does EKS$ refer to (from the graph title)?

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    1. There are two methods to measure PPP adjusted GDP, the Geary-Khamis (GK) or the Eltöto, Kovacs and Szulc (EKS) one. The former weigths the country according to the size of the GDP, while EKS gives every country the same weight. Maddison uses GK, while in this case the Conference Board provides EKS.

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