Kaldor-Verdoorn's Law and Increasing Returns to Scale: A Comparison Across Developed Countries

The objective of this study is to investigate the validity of the Kaldor-Verdoorn’s Law in explaining the long run determinants of the labor productivity growth for the manufacturing sector of some developed economies (Western European Countries, Australia, Canada, Japan and United States). We consider the period 1973-2006 using data provided by the European Commission - Economics and Financial Affairs. Our findings suggest that the law is valid for the manufacturing as countries show increasing returns to scale. Capital growth and labor cost growth do not appear important in explaining productivity growth. The estimated Verdoorn coefficients are found to be substantially stable throughout the period.


Issue Date:
2012-12
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/143122
PURL Identifier:
http://purl.umn.edu/143122
Total Pages:
33
JEL Codes:
C32; O47; O57
Series Statement:
ES
92.2012




 Record created 2017-04-01, last modified 2018-01-22

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