Economics Homework

Econ 205

Professor Joel David

Fall 2013

Homework 3

Part 1 – Productivity

In this exercise, you will obtain and summarize data on productivity growth for a 

particular country and compare its performance to the US. The productivity data are 

available from the Penn World Tables (refer to HW 1 for instructions on how to access 

the PWT).

1. Recalling that productivity is defined as output per worker, download the data on 

real GDP per worker for the same country you have used on HW1 and HW2. The 

series is called “PPP Converted GDP Chain per Worker at 2005 constant prices,” 

with label “rgdpwok.” Obtain all available years.

2. Calculate the percentage change in productivity for each year.

3. Create graphs of both the level of productivity and the percentage change in 

productivity in each year. The x-axis should be years, and the y-axis either the level of 

productivity or the percentage change in productivity. Graphs should be done in Excel, 

not by hand.

4. Since 1950, productivity has grown an average of about 2% per year in the US. 

How does your country compare?

5. In the 1970s, US productivity growth slowed to under 1% per year, compared to 

3% per year in the 1960s. This is called the “productivity slowdown” and was a 

great cause of concern at the time. Did your country have a similar episode?

6. During the “Great Recession,” i.e., from 2008-2010, productivity growth in the 

US was negative, averaging about -1% per year (productivity often falls during

recessions). How did your country perform during these years?

Part 2 – Unemployment

Next, you will analyze some unemployment data from your country. Unemployment data 

are available from the World Bank World Development Indicators database (refer to 

HW2 for instructions on how to accessthese data).

1. Download two data series for your country for the years 1980-2011: the 

unemployment rate (total) and the labor force participation rate (total). I chose 

this period as data are not generally available before this. Labor force 

participation rates may not be available for the early years, that is fine.2. Calculate the average unemployment rate over this period (we can think of this as 

a rough measure of the natural rate of unemployment) and the average labor force 

participation rate.

3. Create graphs showing (1) both the actual and natural rate of unemployment and 

(2) the actual and average labor force participation rate.

4. The average unemployment rate and labor force participation rates in the US over 

this period were 6% and 75%, respectively. How does your country compare? 

What are some reasons the average unemployment (the natural rate) may be 

different than that in the US?

5. From 2008 to 2010, i.e., during the “Great Recession,” the US unemployment rate 

jumped from 5% to 10%. How did your country perform over this period?