decomposition

Relative to the US, labor productivity of the median country has been mostly stagnant, while cross-country disparities have drastically increased. By including the commonly unaccounted covariance between capital and aggregate efficiency into the analysis, disparities in aggregate efficiency explain most of the disparities in labor productivity across countries

Differences in welfare-adjusted development are larger than those predicted by per-capita GDP. Differences in labor productivity account for most of the differences in both production and welfare-adjusted development. Inefficient production is the main factor holding down labor productivity.