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Why has the Employment-Productivity Tradeoff among Industrialized Countries been so strong?

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Author Info
Paul Beaudry
Fabrice Collard

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Abstract

This paper is motivated by a set of cross-country observations on labor productivity growth among industrial countries over the period 1960-1997. In particular, we show that over this period, the speed of convergence among industrialized countries has decreased substantially while the negative effect of a country's own employment growth (or labor force growth) on labor productivity has increased dramatically. The main contribution of the paper is to show how these observations are consistent with the view that industrialized countries have been undergoing a particularly drastic technological revolution over the recent past. In effect, we show how the process of endogenous technological adoption, following the diffusion of a general purpose technology, can explain these observations by causing the emergence of an AK accumulation phase where demographic factors temporarily become an major determinant of labor productivity growth. Our estimation of the model implies that the AK phase has been in effect since the early to mid-seventies, but that this phase may now be coming to an end. An important contribution of the paper is to analyze growth experiences across advanced industrialized countries within an open economy framework and to evaluate the explanation by estimating a multicountry dynamic general model.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8754.

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Date of creation: Jan 2002
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Handle: RePEc:nbr:nberwo:8754

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Find related papers by JEL classification:
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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  1. Canadian Macro Study Group
References listed on IDEAS
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.:
  1. Trajtenberg, M. & Bresnahan, T.F., 1992. "General Purpose Technologies: "Engines of Growth"," Papers 16-92, Tel Aviv.
    Other versions:
  2. Maurice Obstfeld & Kenneth Rogoff, 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Working Papers 7777, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March. [Downloadable!] (restricted)
  4. Joseph Zeira, 1998. "Workers, Machines, And Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1091-1117, November. [Downloadable!] (restricted)
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  5. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2000-1), pages 125-236. [Downloadable!]
    Other versions:
  6. Ventura, Jaume, 1997. "Growth and Interdependence," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 57-84, February.
  7. Paul Beaudry & David Green, 1998. "What is Driving US and Canadian Wages: Exogenous Technical Change or Endogenous Choice of Technique?," NBER Working Papers 6853, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. David N. Weil, 1996. "Appropriate Technology and Growth," Working Papers 96-24, Brown University, Department of Economics.
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  9. BERMAN Eli,BOUND John, MACHIN Stephen, 1997. "Implications of skilled-biased technological change:international evidence," Research Institute of Industrial Economics Working Papers 486, Research Institute of Industrial Economics (IFN).
    Other versions:
  10. Daron Acemoglu, 1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, American Economic Association, vol. 89(5), pages 1259-1278, December. [Downloadable!] (restricted)
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  11. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May. [Downloadable!] (restricted)
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  12. Paul Beaudry & David Green, 2000. "The Changing Structure of Wages in the US and Germany: What Explains the Differences?," NBER Working Papers 7697, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Karl Aiginger & Michael Landesmann, 2002. "Competitive Economic Performance: The European View," WIFO Working Papers 179, WIFO. [Downloadable!]
  2. Beaudry, Paul & Collard, Fabrice, 2003. "Globalization, Gains from Specialization and the World Distribution of Output," IDEI Working Papers 199, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  3. Paul Beaudry & Fabrice Collard & David A. Green, 2002. "Decomposing the Twin-peaks in the World Distribution of Output-per-worker," NBER Working Papers 9240, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Beaudry, Paul & Collard, Fabrice & Green, David, 2003. "Changes in the World Distribution of Output-per-Worker 1960-98 : How a Standard Decomposition tells an Unorthodox Story," IDEI Working Papers 190, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
    Other versions:
  5. Albert van der Horst & Hugo Rojas-Romagosa & Leon Bettendorf, 2009. "Does employment affect productivity?," CPB Discussion Papers 119, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  6. Christopher Gust & Jaime Marquez, 2002. "International comparisons of productivity growth: the role of information technology and regulatory practices," International Finance Discussion Papers 727, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  7. João Ejarque & Ana Balcão Reis, 2003. "The Poverty of Linear Nations: Lessons from Taking an AK Model to the Data," Discussion Papers 03-06, University of Copenhagen. Department of Economics. [Downloadable!]
  8. Joseph Zeira, 2006. "Machines as Engines of Growth," DEGIT Conference Papers c011_059, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
    Other versions:
  9. YOGO, Urbain Thierry, 2008. "Croissance et Emploi en Afrique Subsaharienne:Evidence théorique et Faits Empiriques
    [Growth and Employment In Subsaharan Africa: Theoretical Evidence and Empirical Facts]    ," MPRA Paper 10474, University Library of Munich, Germany, revised 17 Sep 2008. [Downloadable!]
  10. Ian Dew-Becker & Robert J. Gordon, 2008. "The Role of Labor Market Changes in the Slowdown of European Productivity Growth," NBER Working Papers 13840, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Paul Beaudry & Fabrice Collard, 2004. "Globalization, Returns to Accumulationa and the World Distribution of Output," NBER Working Papers 10565, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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