Convergence Clubs in Labor Productivity and its Proximate Sources: Evidence from Developed and Developing Countries (SpringerBriefs in Economics)

Testing for economic convergence across countries has been a central issue in the literature of economic growth and development. This book introduces a modern framework to study the cross-country convergence dynamics in labor productivity and its proximate sources: capital accumulation and aggregate efficiency. In particular, recent convergence dynamics of developed as well as developing countries are evaluated through the lens of a non-linear dynamic factor model and a clustering algorithm for panel data. This framework allows us to examine key economic phenomena such as technological heterogeneity and multiple equilibria. In this context, the book provides a succinct review of the recent club convergence literature, a comparative view of developed and developing countries, and a tutorial on how to implement the club convergence framework in the statistical software Stata. Preface Acknowledgements Contents 1 Introduction and Overview 1.1 Purpose and Research Questions 1.2 A First Overview of the Data 1.2.1 Labor Productivity Differences Across Countries and Over Time 1.2.2 Are There Any Signs of Productivity Convergence? References 2 Measuring Labor Productivity and Its Proximate Sources 2.1 A Production Function Approach 2.2 A Database to Study Labor Productivity Across Countries 2.2.1 Measuring Labor Productivity 2.2.2 Measuring the (Physical) Capital-Output Ratio 2.2.3 Measuring Human Capital Per Worker 2.2.4 Measuring Aggregate Efficiency References 3 A Modern Framework to Study Convergence 3.1 Classical Beta Convergence Approach: Technological Homogeneity and a Unique Equilibrium 3.2 Modern Club Convergence Approach ... 3.3 Finding Convergence Clubs: A Clustering Algorithm For Panel Data 3.4 Brief Overview of the Club Convergence Literature 3.5 Convergence Test and Identification of Clubs Using Stata References 4 Convergence Clubs in Labor Productivity 4.1 Testing for Overall Convergence 4.2 Finding Local Convergence Clubs 4.3 Transition Paths of the Convergence Clubs References 5 Convergence Clubs in Physical and Human Capital 5.1 Physical Capital Ratio 5.1.1 Testing for Overall Convergence 5.1.2 Finding Local Convergence Clubs in Developed Countries 5.1.3 Transition Paths of the Convergence Clubs in Developed Countries 5.2 Human Capital Per Worker 5.2.1 Testing for Overall Convergence 5.2.2 Finding Local Convergence Clubs 5.2.3 Transition Paths of the Convergence Clubs References 6 Convergence Clubs in Aggregate Efficiency 6.1 Testing for Overall Convergence 6.2 Finding Local Convergence Clubs 6.3 Transition Paths of the Convergence Clubs References 7 Concluding Remarks 7.1 Summing Up All Findings 7.2 Some Methodological Takeaways 7.3 New Research Directions References Appendix A List of Developed Countries and Their Convergence Clubs Appendix B List of Developing Countries and Their Convergence Clubs