Decomposing the Twin-peaks in the World Distribution of Output-per-worker

Paul Beaudry, Fabrice Collard, David A. Green

NBER Working Paper No. 9240
Issued in September 2002
NBER Program(s):Labor Studies, Productivity, Innovation, and Entrepreneurship

This papers examines changes in the distribution of per-worker-output across countries over the period 1960-98, with a particular focus on identifying the forces behind the hollowing out of the middle of the distribution and the associated emergence of a twin-peaks phenomenon. The main finding of the paper is that most of the change in shape of the world distribution of income between 1960-1998 can be accounted for by changes in the parameters driving the growth process. In particular, we show that role of physical capital investment and population growth in affecting output growth has increased substantially over the period and that this increase can account for all the hollowing-out of the distribution. In contrast, we do not find that changes in the distribution of variables played much of a role, nor do we find any significant effects coming through non-linear convergence mechanisms or increased importance of education. Our results suggest that research aimed at understanding changes in the world distribution of income should focus on explaining why the social returns to physical capital accumulation where so high over the period 1978-98. The paper ends by discussing elements that help understand this phenomena.

download in pdf format
   (596 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9240

Users who downloaded this paper also downloaded* these:
Beaudry and Collard w8754 Why has the Employment-Productivity Tradeoff among Industrialized Countries been so strong?
Durlauf and Quah w6422 The New Empirics of Economic Growth
Beaudry and Green w8787 Changes in U.S. Wages 1976-2000: Ongoing Skill Bias or Major Technological Change?
Sachs and Warner w5398 Natural Resource Abundance and Economic Growth
Lusardi and Mitchell w15350 How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us