Regional Productivity Convergence in Peru
This paper examines whether labor productivity converged across Peru’s regions (“departments”) during 2002-12. Given the large differences in labor productivity across the regions of Peru, such convergence has the potential to raise aggregate produ...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/11/25470529/regional-productivity-convergence-peru http://hdl.handle.net/10986/23463 |
| Summary: | This paper examines whether labor
productivity converged across Peru’s regions (“departments”)
during 2002-12. Given the large differences in labor
productivity across the regions of Peru, such convergence
has the potential to raise aggregate productivity and
incomes, and also reduce regional inequalities. The paper
finds that labor productivity in the secondary sector
(especially manufacturing) and the mining sector has
converged across Peruvian departments. The paper does not
find robust evidence for labor productivity convergence in
agriculture and services. These patterns are consistent with
recent cross-country evidence and with the hypothesis that
productivity convergence is more likely in sectors with
greater scope for market integration, because of the effects
of competition and knowledge flows. The convergence in labor
productivity within manufacturing and mining has been
sufficient to lead to convergence in aggregate labor
productivity across departments. But because services and
agriculture continue to employ the majority of workers in
Peru, aggregate convergence is slower than that within
manufacturing. The paper also finds that poverty rates are
not converging across departments. The limited impact of
labor productivity convergence on poverty could be tied to
the facts that not all sectors are experiencing productivity
convergence, poorer people are employed in sectors where
convergence has been slower (such as agriculture), and there
is very little labor reallocation toward converging sectors
(such as manufacturing). |
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