Sectoral productivity growth, COVID-19 shocks, and infrastructure

Arbeitspapier

This paper examines sectoral productivity shocks of the COVID-19 pandemic, their aggregate impact, and the possible compensatory effects of improving productivity in infrastructure-related sectors. We employ the KLEMS annual dataset for a group of OECD and Latin America and the Caribbean countries, complemented with high-frequency data for 2020. First, we estimate a panel vector autoregression of growth rates in sector level labor productivity to specify the nature and size of sectoral shocks using the historical data. We then run impulse-response simulations of one standard deviation shocks in the sectors that were most affected by COVID 19. We estimate that the pandemic cut economy-wide labor productivity by 4.9 percent in Latin America, and by 3.5 percent for the entire sample. Finally, by modeling the long-run relationship between productivity shocks in the sectors most affected by COVID 19, we find that large productivity improvements in infrastructure - equivalent to at least three times the historical rates of productivity gains - may be needed to fully compensate for the negative productivity losses traceable to COVID 19.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IDB Working Paper Series ; No. IDB-WP-1256

Classification and Topics

• Classification: Wirtschaft ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence ; Model Construction and Estimation
• Subject: COVID-19 ; Sector shocks ; Productivity ; Infrastructure

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ahumada, Hildegart A. ; Cavallo, Eduardo A. ; Espina-Mairal, Santos ; Navajas, Fernando
• Event: Veröffentlichung
• (who): Inter-American Development Bank (IDB)
• (where): Washington, DC
• (when): 2021

Further information

• DOI: doi:10.18235/0003411
• Handle: http://hdl.handle.net/10419/237512
• Last update: 10.03.2025, 11:45 AM CET