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IZA Discussion Paper No. 18377
February 2026
Construction Productivity and Income Convergence

This paper examines the implications of heterogeneity in construction productivity on cross-country income disparity. Using a sample of 168 countries, we estimate the 10:1 spread in construction productivity as a factor of 49-fold in 2017. The construction productivity gap falls by 46 percent when production networks are incorporated in the development accounting framework. Based on counterfactual analysis, the elimination of cross-country disparity in construction productivity lowers the 10:1 spread in GDP per capita by 55 percent. Variations in both the intermediates share of construction output and complementarity in intermediate inputs across countries drive the aggregate effects of construction productivity shock.

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Mark Fallak
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Olga Nottmeyer
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+352 585-855-501
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Christina Gathmann
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Das IZA@LISER-Netzwerk ist eine weltweite Gemeinschaft für exzellente Forschung in der Arbeitsmarktökonomie und angrenzenden Fachgebieten. Nach dem Wechsel von Bonn wird das Netzwerk nun am Luxembourg Institute of Socio-Economic Research (LISER) koordiniert.

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