This paper presents a new benchmark of fisher weighted sector PPPs for agriculture, mining and five manufacturing branches in the US, UK, France and the Netherlands around 1910. The PPPs are constructed according to an industry-of-origin approach in order to assess comparative levels of labour productivity at a sector level. The estimates are subsequently used to build up a comparison of total labour productivity and GDP per capita. Our main findings are that the relative levels of labour productivity and per capita GDP in the Western European countries have been overestimated in the literature so far. A backward projection of our productivity estimates 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. The US-UK take-over occurred between 1879 and 1899 in terms of GDP per capita, but we show that in terms of aggregate labour productivity the US was already world leader around 1850. The Dutch economy seems to have lost its economic leadership earlier than hitherto has been assumed.

For over three decades (1966-1998) socio-economic policies in Indonesia were founded on Soeharto’s development trilogy “growth, stability and equity”. Literature agrees that the policy goals of growth and stability were met by and large, but remains inconclusive about equity. In this paper we estimate Theil indices of sector income distribution to evaluate the impact of structural change on the trend of Indonesian income inequality for the period 1961-2002. Where conventional Gini-coefficients based on household expenditure surveys suggest that Indonesian income equality is comparatively confined and reveals no long run tendency in either upward or downward direction, our results indicate that inter and intra-sector income inequality increased rapidly under Soeharto, as well as the share of the labour force engaged in informal sector activities.

The colonial heritage of high land inequality in Latin American countries is still, after nearly two centuries of independence, one of the crucial underpinnings of its persistent high levels of income inequality. This paper assesses the colonial strategy of land redistribution in a global comparative perspective using new and existing land inequality figures in an OLS regression framework. The two central questions addressed are 1) what explains the cross-country variation in land inequality at the end of the colonial age? 2) how does initial land inequality relate to current income inequality? The main conclusions of the paper are that geography and factor endowments play a less decisive role than often argued in literature. And second, controlling for regional fixed effects, initial land inequality explains a substantial part of the present cross-country variation in current income inequality.

Cross-country research on educational inequality presents contrasting views on the extent of educational inequality in Latin America and Sub-Saharan Africa. The differences in opinion also concern the relation between educational inequality and income inequality. This paper argues that part of the reported results are influenced by the type of inequality indicator applied. Moreover, there may be a separate effect of educational attainment and educational distribution on income inequality, which cannot be discerned properly by conventional indicators (in particular the Gini-coefficient faces this problem). A new indicator of educational distribution, which we coined the grade enrolment ratio, focuses at the distribution of students among consecutive grades in schooling, apart from average years of schooling (attainment). We find that the grade enrolment ratio outperforms the other indicators in explaining cross-country variation in income inequality and accurately assesses Latin American and Sub-Saharan African educational inequality.

This study argues that the creation of productive jobs is the key to economic growth, social development and improvements in living standards. The study provides extensive empirical evidence showing that the long run trend has been towards simultaneous growth in per capita income, productivity and employment growth. However, depending on the type of indicator and the time frame adopted, there are legitimate concerns about the distribution of the productivity and welfare gains from growth both within as well as between countries. Following the analysis of the long term growth pattern (Chapter 2), the study investigates under which conditions, in which regions and which industries a trade-off occurs between productivity and employment growth. In Chapter 3 patterns of employment-productivity trade-offs are established across regions and time periods at the macro level. Chapter 4 focuses on sectors of the economy. In Chapter 5 the study discusses the policy areas that will be most conducive to breaking or reducing the trade-off between productivity growth and employment in order to exploit the long run growth potential. We argue that, in addition to sound macroeconomic policies, a sensible role for market forces in allocating resources to their most productive uses is important. However, the key challenge is to create an institutional environment that can alleviate some of the negative effects in the short and medium run while not hampering the realisation of the long run growth potential. Support to the creation of social capabilities and national innovation systems are important policy areas to achieve this goal. While strengthening an economy’s fundamentals in the short and medium run, these also contribute to the virtuous circle of productivity growth, employment creation and poverty alleviation, which is the main theme of the ILO World Employment Report 2004.