DP4596 | Labour Productivity in the US and the UK During the 19th Century

Publication Date

23/09/2004

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Abstract

A number of writers have recently questioned whether labour productivity or per capita incomes were ever higher in the United Kingdom than in the United States. We show that although the United States already had a substantial labour productivity lead in industry as early as 1840, especially in manufacturing, labour productivity was broadly equal in the two countries in agriculture, while the United Kingdom was ahead in services. Hence aggregate labour productivity was higher in the United Kingdom, particularly since the United States had a larger share of the labour force in low value-added agriculture. US overtaking occurred decisively only during the 1890s, as labour productivity pulled ahead in services and the share of agricultural employment declined substantially. The share of the population in the labour force was lower in the United States, so that the United Kingdom?s labour productivity advantage in the mid-nineteenth century translated into a larger per capita income lead.