Did the Verdoorn Law Hang on Japan
AbstractKaldor (1966) presented Verdoorn "law," having found a statistically significant relation between manufacturing productivity growth and manufacturing output growth using least squares on a small postwar sample that included Japanese data. Rowthorn (1975) claimed that the Verdoorn "law" fell apart when manufacturing employment growth was the independent variable and Japan was removed from Kaldor's sample. This paper shows if output growth is independent of the random error term, then the maximum likelihood estimates of Kaldor's equation arrived at by least squares are sufficient to determine the maximum likelihood estimates and the statistical significance of Rowthorn's equation. It is wrong in this context to say that the "law" fell apart.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 17 (1991)
Issue (Month): 1 (Jan-Mar)
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Find related papers by JEL classification:
- E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- McCombie, J S L, 1985. "Increasing Returns and the Manufacturing Industries: Some Empirical Issues," The Manchester School of Economic & Social Studies, University of Manchester, vol. 53(1), pages 55-75, March.
- Plosser, Charles I. & Schwert, G. William, 1979. "Potential GNP: Its measurement and significance : A dissenting opinion," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 10(1), pages 179-186, January.
- Rowthorn, R E, 1975. "What Remains of Kaldor's Law?," Economic Journal, Royal Economic Society, vol. 85(337), pages 10-19, March.
- Jordi Pons-Novell & Elisabet Viladecans-Marsal, 1998. "Spatial dependence and Kaldor's laws: Evidence for the European regions," ERSA conference papers ersa98p55, European Regional Science Association.
- Jordi Pons-Novell & Elisabet Viladecans-Marsal, 1999. "Kaldor's Laws and Spatial Dependence: Evidence for the European Regions," Regional Studies, Taylor and Francis Journals, vol. 33(5), pages 443-451.
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