On the Tang and Wang Decomposition of Labour Productivity Growth into Sectoral Effects

Tang and Wang provided a decomposition of economy wide labour productivity into sectoral contribution effects. The present note reworks their methodology to provide a more transparent and simple decomposition. This new decomposition is then related to another decomposition due to Gini and analyzed by Balk. Overall growth in labour productivity is due to three factors: (i) growth in the labour productivity of individual sectors; (ii) changes in real output prices of the sectors and (iii) changes in the allocation of labour across sectors.