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

Posted: 23 Jul 1998

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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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.

JEL Classification: E22, E23, O12

Suggested Citation

Hall, Robert E. and Jones, Charles I., Why Do Some Countries Produce so Much More Output Per Worker than Others?. Quarterly Journal of Economics. Available at SSRN: https://ssrn.com/abstract=93665

Robert E. Hall

Hoover Institution and Department of Economics, Stanford University ( email )

Stanford, CA 94305-6010
United States
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National Bureau of Economic Research (NBER)

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Charles I. Jones (Contact Author)

Stanford Graduate School of Business ( email )

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650-725-9265 (Phone)

HOME PAGE: http://www.stanford.edu/~chadj

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