Why Do Some Countries Produce So Much More Output per Worker than Others? Some Further Results

Abstract

To explain differences in output per worker across countries, the authors test for the workings of a learning-by-doing hypothesis and the hypothesis that the effectiveness of human capital depends on the laws and institutions that promote workplace practices that allow skills to develop. The quality of laws and institutions in the workplace is measured by an index of economic security (ESI). Pikoulakis and Minoiu find that ESI is a good proxy for human capital whilst educational attainment is not. They also find that countries with high ESI use more effectively the skills of the workforce and are better at exploiting profitable opportunities in capital markets