The paper's purpose is to show that the reported (and growing) labour productivity gap between the G7 and OECD countries and the USA might be a factor of the rapid adoption of shadow banking structures and techniques in the USA versus the adoption of those structures in OECD and G7 economies.
The paper explains the concept and practice of shadow banking and explores the ways in which the various conventions adopted distort reported productivity figures.
The growing adoption of shadow banking over the period 1974‐2007 has had the effect of increasing the metrics for labour productivity over the same period.
It is clear that those who wish to understand the apparent growing gap between labour productivity of the USA and other G7/OECD nations must look beyond the simple reported figures to identify the ways in which figures are calculated and reported.
The paper shows that reporting of figures to established conventions can be affected by a range of factors, not apparent from looking at those conventions themselves.
