Sources of transport sector labor productivity performance in industrialized countries: Insights from a decomposition analysis

Abstract

This study examines patterns and sources of growth in the transport sector's labor productivity across 13 industrialized countries over the period 2000–2015. Through decomposition analysis – specifically, the growth accounting method and industry origin analysis – the study makes three principal findings. First, total factor productivity growth plays a crucial but often underleveraged role in driving the sector's growth and catch-up on labor productivity. Second, digital transformation – especially investment in software and database assets – is a significant source of the sector's labor productivity growth and catch-up, while innovation-related capital has a complementary effect. Third, subsector-level labor productivity improvement is the major driver of the sector's overall labor productivity growth, while the growth contribution of labor reallocation among subsectors is insignificant. The article concludes with a discussion of policy insights and implications.