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Institutions and Productivity

Paper Session

Friday, Jan. 6, 2023 8:00 AM - 10:00 AM (CST)

New Orleans Marriott, Preservation Hall Studio 2
Hosted By: Association for Comparative Economic Studies
  • Chair: John Fernald, INSEAD and Federal Reserve Bank of San Francisco

The Role of At-Home Work in the Pandemic-Era Revival of U.S. Productivity Growth

Robert J. Gordon
Northwestern University and NBER
Hassan Sayed
Princeton University


Abstract: After growing at the dismal annual rate of 1.1 percent per year during the decade
of 2010-19, private-sector U.S. output per hour surged ahead in 2020-21 at an annual rate of
3.1 percent, faster even than achieved in the “dot.com” decade of 1995-2005. This paper
places this productivity growth revival into the context of previous business cycles by
developing a model of cyclical productivity behavior that highlights the countercyclical
behavior observed in 2008-2009 and again in 2020-2021. The paper develops a unique
quarterly database of productivity by industry and quantifies the role of shifts in output mix
toward industries with a higher level of productivity. Most of these high-productivity-level
industries were in the service sector and were characterized by work-at-home during the
two pandemic years, and their high productivity growth in those years contrasted with the
slow or negative productivity growth in “contact services” where workers had to be present
on the job. The results are complementary with recent survey research showing that at-
home workers reported being more productive at home and reported as well that they
worked at home during hours previously spent commuting.

The Political U: New Evidence on the Income-Democracy Relationship

Nauro F. Campos
University College London
Fabrizio Coricelli
University of Siena and CEPR
Marco Frigerio
University of Siena


Abstract: This paper throws new light on the relationship between income and democracy.
Using data for 170 countries from 1960 to 2018, new measures and methods, we argue that
the causal relationship between political and economic development is U-shaped. We find
that “intermediate political regimes” lead to significantly inferior economic performance
compared to that led by both “democracies” and “autocracies.” Concerning the main
mechanisms, we find strong evidence for both productivity and social unrest; while other
potential channels, such as education, investment and structural reforms, lack comparably
strong empirical support. These findings are robust to changes in estimators, democracy
measures and time windows.

Productivity Gains, Working Time and Leisure: A Long-Term View in Advanced Countries

Gilbert Cette
NEOMA Business School
Jimmy Lopez
University of Burgundy
Simon Drapala
Paris School of Economics


In this paper, we estimate a long circular relationship between working time and
productivity: while a productivity improvement may finance an increase in leisure time and
thus a decrease in the working time, this decrease may boost productivity thanks to the
lower fatigue at work. Our estimates are made on two datasets: a long (1890-2019) country
panel and a shorter (1970-2019) cross country-industry panel, both covering about 20
advanced countries. Our results support the circular relationship between working time and
productivity. They also suggest that the low productivity gains observed since mid-2000s
could lead to a working-time increase in advanced countries, as the preference for a slight
improvement of purchasing power seems to overtake the wish for more leisure.

Blood, Education and Economic Development: How the 19th Century Wars in Latin America Foiled its Economic Development

Jakob B. Madsen
University of Western Australia
Miethy Zaman
Deakin University


In this paper, we argue that the prolonged wars during most of the 19th century
were significant factors behind the slow productivity advances in Latin America over the past
two centuries. Collecting unique data for seven Latin American countries over the period
1820-2016, we show that the extraordinary large share military expenditure on
governments’ budgets during the entire 19th century, and beyond that, crowded out
investment in education and, consequently delayed the development of the Latin American
JEL Classifications
  • O1 - Economic Development
  • O3 - Innovation; Research and Development; Technological Change; Intellectual Property Rights