Sanchez-Bayardo, Luis F.Iacovone, LeonardoSharma, Siddharth2015-12-182015-12-182015-11https://hdl.handle.net/10986/23463This paper examines whether labor productivity converged across Peru’s regions (“departments”) during 2002-12. Given the large differences in labor productivity across the regions of Peru, such convergence has the potential to raise aggregate productivity and incomes, and also reduce regional inequalities. The paper finds that labor productivity in the secondary sector (especially manufacturing) and the mining sector has converged across Peruvian departments. The paper does not find robust evidence for labor productivity convergence in agriculture and services. These patterns are consistent with recent cross-country evidence and with the hypothesis that productivity convergence is more likely in sectors with greater scope for market integration, because of the effects of competition and knowledge flows. The convergence in labor productivity within manufacturing and mining has been sufficient to lead to convergence in aggregate labor productivity across departments. But because services and agriculture continue to employ the majority of workers in Peru, aggregate convergence is slower than that within manufacturing. The paper also finds that poverty rates are not converging across departments. The limited impact of labor productivity convergence on poverty could be tied to the facts that not all sectors are experiencing productivity convergence, poorer people are employed in sectors where convergence has been slower (such as agriculture), and there is very little labor reallocation toward converging sectors (such as manufacturing).en-USCC BY 3.0 IGOGROWTH RATESJOBSGROWTH RATEEMPLOYMENTSTRUCTURAL TRANSFORMATIONHOUSEHOLD SURVEYPOVERTY REDUCTIONPOVERTY LINEPRODUCTIVITY LEVELSECONOMIC GROWTHACCOUNTINGSKILLED WORKERSLABOR REALLOCATIONPRODUCTIONPRODUCTION CHAINSAGGREGATE PRODUCTIVITYCAPITAL ACCUMULATIONSKILLED WORKERSEMPLOYMENT SHAREPOVERTY LEVELSINCOMESCHOOLINGSERVICE SECTORPOVERTY RATESFARM PRODUCTIVITYCONVERGENCELABOR ALLOCATIONREGIONAL INCOMESINFORMATIONEMPLOYMENT INFORMATIONPOLITICAL ECONOMYCAPITAL ACCUMULATIONSERVICE SECTORADVANCED REGIONSEFFECTSGLOBAL PRODUCTION CHAINSAGGREGATE PRODUCTIVITYLAGGING REGIONSGLOBAL PRODUCTION CHAINSRURAL POPULATIONCOMPETITIVE PRESSUREREGIONAL PRODUCTIVITYHUMAN CAPITAL LEVELSREGIONAL GROWTHREGIONAL PRODUCTIVITYREGIONREGIONAL GAPSPOVERTY REDUCTIONREGIONAL DATAHIGH‐POVERTY REGIONTOTAL FACTOR PRODUCTIVITYREGIONAL DEVELOPMENT POLICIESDEVELOPMENT ECONOMICSPOVERTY GAPLABOR PRODUCTIVITY GROWTHWORKERREGIONAL TRADEGLOBAL PRODUCTIONMARKET INTEGRATIONPRODUCTIVITYLABOR PRODUCTIVITYPRODUCTIVITY CONVERGENCESTANDARD ERRORSSPATIAL PATTERNSPOORER PEOPLEMARKETSORGANIZATIONSLABOR ALLOCATIONGROWTH THEORYLABORLABOR PRODUCTIVITYLABOR PRODUCTIVITY GROWTHTOTAL EMPLOYMENTPRODUCTION PROCESSESEMPLOYMENT SHAREFINANCEHIGH POVERTY REGIONSREGIONAL CONVERGENCEPRODUCTIVITY GROWTH RATEEQUITYPRODUCTIVITY GROWTHCONSUMPTIONHUMAN CAPITALGLOBAL PRODUCTIONEMPLOYMENT INFORMATIONWORKERSPRODUCTIVITY LEVELSWAGESSTANDARD ERRORSPOLICIESTOTAL EMPLOYMENTSOCIAL SERVICESPRODUCTIVITY CONVERGENCEPOVERTY RATESREGIONAL LABORSPATIAL DISPERSIONPRODUCTIVITY LEVELLABOR DEMANDVALUEREGIONAL DIFFERENCESRICH REGIONSSPATIAL ANALYSISSPATIAL EQUITYLABOR DEMANDTOTAL FACTOR PRODUCTIVITYREGIONAL SPECIALIZATIONLABOR MOBILITYPRODUCTIVITY DISTRIBUTIONTECHNOLOGY DIFFUSIONPOVERTY LEVELECONOMICSHUMAN CAPITALMANAGEMENTLAGGING REGIONSPRODUCTIVITY LEVELPOVERTY REGIONSREGIONAL LABORMANUFACTURING INDUSTRIESAGRICULTURAL PRODUCTSTHEORYREGIONSGROWTH RATEREGIONAL DEVELOPMENTINVESTMENTREGIONAL ECONOMIC GROWTHREGIONAL OUTPUTCOMPARATIVE ADVANTAGEREGIONAL DEVELOPMENTPOVERTYGLOBAL INTEGRATIONFINANCIAL MARKETSSUPPLYTECHNOLOGY DIFFUSIONAGGREGATE CONVERGENCEAGRICULTURAL PRODUCTIVITYMARKET INTEGRATIONREGIONAL TRADEDECLINE IN POVERTYREGIONAL INCOMEPRODUCTIVITY GROWTHGROWTH THEORYPOOR REGIONSAGGREGATE CONVERGENCEPOVERTY RATEGLOBAL INTEGRATIONFINANCIAL MARKETSCONSUMPTION BASKETECONOMIC GROWTHSOCIAL SERVICESLABOR SHAREPRICESFIRM‐LEVELPOVERTY ALLEVIATIONREGIONAL CONVERGENCELABOR REALLOCATIONPRODUCTION PROCESSESMANUFACTURING INDUSTRIESREGIONAL INEQUALITIESHOUSEHOLD SURVEYWorking PaperWorld Bank10.1596/1813-9450-7499