Saturday, May 1, 2021

Labor force growth and labor productivity

The relation between labor force growth and labor productivity? I don't know. So I went looking.


Crazy Explanations for the Productivity Slowdown (PDF, 40 pages) by Paul M. Romer

For the explanation of the productivity puzzle, the key implication of this revised interpretation of growth accounting is that an increase in the rate of growth of labor will be accompanied by a fall in the rate of growth of labor productivity. This may explain the productivity slowdown in the United States since the 1960s...

 

Determinants of Labor Productivity: An Empirical Investigation of Productivity Divergence, by Misbah Tanveer Choudhry, University of Groningen, The Netherlands

We  analyzed  the  determinants  of  labor  productivity  for  the  group  of  40  countries,  representing   four   different   income   groups   in   the   world.   This   study   confirms   the   diminishing return to labor force participation rate both in short run as well as in the long run. We find that negative impact of increased  labor  force  participation is high in lower and lower middle income economies compared to high income and upper middle income economies.


WHY HAS THE EMPLOYMENT-PRODUCTIVITY TRADEOFF AMONG INDUSTRIALIZED COUNTRIES BEEN SO STRONG? by Paul Beaudry & Fabrice Collard. Working Paper 8754

Neoclassical growth theory predicts that, along a transitional path, countries with higher rates of labor force growth should exhibit less labor productivity growth due to the need to use scarce capital to equip new workers.

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