On convergence accounting

This paper analyses a simple and direct way to break down the convergence f or labour productivity into contributions from different sources by running separate convergence regressions of the contribution to growth of each fac tor on the initial labour productivity level. This is because the total con vergence parameter is simply the sum of parameters of convergence in such s eparate regressions. An application for OECD countries over the period 1965 -90 shows that TFP growth is the main factor in explaining OECD labour prod uctivity convergence. Physical investment was an important source of conver gence, but only until 1980. Finally human capital accumulation had little e ffect throughout the period, with a minor positive effect in the last years .