Productivity in services in Latin America and the Caribbean

This paper studies productivity in Latin America and the Caribbean, with
an emphasis on the service sector. It shows that the low levels of
productivity observed in the region are not only a consequence of low
productivity at the firm level, but also of misallocation of workers
across firms. These problems are more severe in services than in
manufacturing. We also found that the determinants of productivity and
employment growth at the firm level are different in manufacturing and
services. Furthermore, results suggest that institutional factors might
be important for determining productivity growth and resource
allocation, as there are large differences across countries in the
region in the effect of productivity on employment growth as well as on
the speed at which less productive firms can close their productivity
gaps.