Sectoral and Skill Contributions to Labor Productivity in Asia

20 Pages Posted: 19 Apr 2019

See all articles by Matthias Helble

Matthias Helble

Asian Development Bank; ADBI; ADBI

Long Q. Trinh

Asian Development Bank Institute

Trang T Le

Asian Development Bank Institute

Date Written: March 7, 2019

Abstract

Using a decomposition approach on data collected by the Asian Productivity Organization (APO) as well as World Input-Output data, we show that in most Asian economies the services sector makes the largest contribution to labor productivity. Furthermore, we find evidence of a major reallocation of labor from agriculture directly to services, bypassing the manufacturing sector. This finding challenges the traditional view that countries in their economic development need to have their workforce employed first in manufacturing before switching to services. Lastly, the paper studies how different skill levels contribute to labor productivity growth. We find that high-skilled workers have contributed most to overall labor productivity growth in developing Asia. In services, high-skilled workers have mainly driven labor productivity, indicating that upskilling and training are instrumental in services-led development.

Keywords: labor productivity, manufacturing, services, skills

JEL Classification: O11, J21

Suggested Citation

Helble, Matthias and Trinh, Long Q. and Le, Trang T, Sectoral and Skill Contributions to Labor Productivity in Asia (March 7, 2019). ADBI Working Paper 929, Available at SSRN: https://ssrn.com/abstract=3374794 or http://dx.doi.org/10.2139/ssrn.3374794

Matthias Helble (Contact Author)

Asian Development Bank ( email )

Philippines
006326831120 (Phone)

ADBI ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

ADBI ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Long Q. Trinh

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Trang T Le

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

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