Economic growth and economic development 160

1.5

Introduction to Modern Economic Growth

ITA

Calibrated productivity differences 1988
0
.5
1

ESP
PRT

BELFRA
SGP

CAN

HKG
IRL

COL
URY

PAK

AUT

NLD
CHE

FIN SWE
DNK

GRC

NOR

JPN
NZL
ISR

PAN

IDN
BGD
THA
LKA

0

.2
.4
.6
Estimated labor-productivity differences

.8

1

Figure 3.6. Comparison of the labor productivity estimates from
the Trefler approach with the calibrated productivity differences from
the Hall-Jones approach.
example, labor in Pakistan is 1/25th as productive as labor in the United States.
In contrast, capital productivity differences are much more limited than labor productivity differences; capital in Pakistan is only half as productive as capital in the
United States. This finding is not only intriguing in itself, but we will see that it is
quite consistent with a class of models of technical change we will study in Chapter
15.
It is also informative to compare the productivity difference estimates here to
those from the previous section. Figures 3.6 and 3.7 undertake this comparison.
The first plots the labor-productivity difference estimates from the Trefler approach
against the calibrated overall productivity differences from the Cobb-Douglas specification in the previous section. The similarity between the two series is remarkable.
This gives us a little confidence that both approaches are capturing some features
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