Fourth, labor productivity growth may also be a source of inequality in
Southeast Asia. The coefficient of labor productivity is positive and statistically
significant in all the specifications (except Model 1), suggesting that the countries
with higher labor productivity in terms of value added per worker tend to be
characterized by a more uneven income distribution. This can be explained by the
fact that higher labor productivity is associated with high-tech capital accumulation
and technology advancement, which in turn bolster the premium for skilled
workers and returns to capital. Since unskilled workers take up a larger share of
the population in Southeast Asia, higher labor productivity leads to more uneven
income disparities.