On Productivity Convergence in European Manufacturing
UCSC Department of Economics Working Paper No. 402
Posted: 9 Oct 1998
Date Written: June 1998
This paper investigates productivity convergence in the Manufacturing sector for a set of European countries using a time series framework. We apply a panel data unit root test (PDUR) to total factor productivity (TFP) differentials, where the null hypothesis--the presence of a unit root or a deterministic component--can be interpreted as no convergence. Earlier studies have consistently found the Manufacturing sector non-converging. Our empirical analysis reveals more evidence of convergence as higher levels of disaggregation are explored. We suggest product heterogeneity as a major source for the negative findings of convergence at the aggregate level.
JEL Classification: E23, C33
Suggested Citation: Suggested Citation