Productivity convergence at the disaggregate levels

Using recently developed industry-specific purchasing power parities (PPPs), we test for β-convergence and σ-convergence of labor productivity at one-digit and two-digit industrial levels for 17 OECD countries. We confirm that the principal finding of Bernard and Jones (1996)—that total manufacturing shows little evidence of productivity convergence among OECD countries—is in fact supported by the data, even though their approach is flawed by the use of aggregate rather than industry-specific PPPs. However, we find that many two-digit manufacturing industries do converge. All one-digit sectors except manufacturing exhibit strong convergence trends. Convergence also occurs in all services industries except post and telecommunications. Respective contributions of industrial productivity growth and across-industry labor shifts to trends at the next aggregate level are also analyzed.