Abstract
In Penn World Table (PWT) 8.1, several developing countries stand out as outliers
with high total factor productivity (TFP) levels relative to the United States (U.S.).
For example, in 2011, Zimbabwe and Trinidad and Tobago are reported to have 3 and
1.6 times higher TFP levels than the U.S., respectively. In addition, for several other
countries, such as Turkey and Gabon, the stated levels of TFP are very similar to
that of the U.S. level (1.01 and 1.11 times the U.S. levels, respectively). Estimates
for some of these countries seem rather unlikely when compared with other measures
of productivity (such as output per worker). While in the construction of TFP levels
PWT does use country-speci c factor shares we show that their results are very similar
to calculating TFP levels with a Cobb-Douglas production function where capital and
labor shares are assumed to be the same across all countries, i.e., using a constant
labor share of 2/3 for all countries. A simple modi cation, using a constant labor
share of 2/3 for developed countries and 1/2 for developing countries, generates more
\plausible" estimates for TFP levels.