In the article a concept of comparing public and private sector effectiveness is presented. It is based on an analysis of the productivity of capital and labour in both sectors. For this purpose, the authors build growth model in the general and intensive form, taking into account public and private sectors and their relationships in terms of gross value of fixed assets, and employment. Empirical analysis is carried out using a panel model for Polish provinces in the years 2002-2009. The analysis show that the size of the public sector in terms of labour and capital is negatively correlated with Gross Domestic Product and gross value added per employee. Research has shown that the productivity in the two sectors is different. The private sector has a higher productivity of both labour and capital in comparison to the public sector. The authors are of the opinion that the analysis in terms of labour and capital in both sectors substantially complements the more common approach aimed at measuring the effectiveness of public sector from the point of view of expenditures. Proposed analysis has the advantage that it expresses two sectors, which use different accounting categories, in the same economic terms - productivity.