Pieter (Jop) WOLTJER

A New PPP Benchmark and its Implications for Changing Economic Leadership

ABSTRACT: This paper presents a new benchmark of output and relative prices (PPPs) for agriculture, mining and five manufacturing branches in the US, UK, France and the Netherlands around 1910. The Fisher-weighted PPPs are constructed according to the industry-of-origin approach in order to assess comparative levels of output per worker. The sectoral estimates are subsequently used to build up a comparison of output per worker and per head at the total economy level. Our main findings are that the levels of labour productivity and per capita GDP in the Western European countries relative to the US have been overestimated in the literature so far. Backward projection into the nineteenth century sheds new light on the timing of the take-over in productivity and income leadership between the Netherlands, UK and US. In terms of GDP per capita, the US took over the UK between 1879 and 1899, while in terms of labour productivity the US was already world leader around 1850. Also the Dutch economy seems to have lost its economic leadership earlier than hitherto has been assumed.

AUTHORS: Ewout Frankema, Jan Pieter Smits and Pieter Woltjer

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Data

The data-set for this working paper is split into four parts: (1) an overview of the nominal value added and employment by sector for France (FR), the Netherlands (NL), the United Kingdom (UK) and the United States (US) for ca. 1910; (2) the product prices making up the PPPs for the UK and US; (3) the product prices for the NL and US; (4) the product prices for FR and the US. All data are at the 2-digit or 3-digit industry level.

	file	variables	countries	years	# obs.
	wp_comparative_productivity_app_B	va, emp	FR, NL, UK, US	1909	192
	wp_comparative_productivity_app_C1	uvr, ppp	UK, US	1909	327
	wp_comparative_productivity_app_C2	uvr, ppp	NL, US	1909	120
	wp_comparative_productivity_app_C3	uvr, ppp	FR, US	1909	192

IMPORTANT: The data underlying ‘Comparative Productivity …‘ are freely available as long as the article is cited appropriately (see below).

Sources and Methods

A detailed description of the primary and secondary sources used to calculate Purchasing Power Parities and estimate comparative labor productivity are provided in the PDF file below.

	file	description
	wp_comparative_productivity_app_A	Overview of primary and secondary sources

IMPORTANT: The sources and methods underlying ‘Comparative Productivity …‘ are freely available as long as the article is cited appropriately (see below).

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