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An Empirical Analysis of Australian Labour Productivity

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  • Abbas Valadkhani

Abstract

This study presents a model capturing sources of Australian aggregate labour productivity using annual time series data from 1970 to 2001. Labour productivity, or real output per hour worked, in this model is determined by real net capital stock in information technology and telecommunications (ITT), real net capital stock in the non‐ITT sector, trade openness, human capital, the wage rate, international competitiveness, and the union membership rate. Given the lack of long and consistent time series data, multivariate cointegration techniques are inappropriate as the cointegration results will be sensitive to the lag length, the inclusion or exclusion of the intercept term or a trend in the cointegration equation and/or the vector autoregression (VAR) specification. Therefore, the Engle‐Granger representation theorem and the Hausman weak exogeneity test have been employed to determine the short and long‐term drivers of Australian productivity. Empirical estimates indicate that, in the long‐term, policies aimed at promoting various types of investment, trade openness, international competitiveness, and the use of wage as a stimulant in a decentralised wage negotiation system, will improve labour productivity. In the short term, all the above variables except for human capital and labour reforms, which both need more time to evolve, determine productivity performance.

Suggested Citation

  • Abbas Valadkhani, 2003. "An Empirical Analysis of Australian Labour Productivity," Australian Economic Papers, Wiley Blackwell, vol. 42(3), pages 273-291, September.
    • Handle: RePEc:bla:ausecp:v:42:y:2003:i:3:p:273-291
    DOI: 10.1111/1467-8454.00199
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    References listed on IDEAS

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    1. Dean Parham & Paul Roberts & Haishun Sun, 2001. "Information Technology and Australia’s Productivity Surge," Development and Comp Systems 0110006, University Library of Munich, Germany.
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    Cited by:

    1. Dean Parham, 2004. "Sources of Australia's Productivity Revival," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 239-257, June.
    2. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2020. "Union, Efficiency of Labour and Endogenous Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 170-202, December.
    3. Kennedy, Tom & Rae, Maria & Sheridan, Alison & Valadkhani, Abbas, 2017. "Reducing gender wage inequality increases economic prosperity for all: Insights from Australia," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 14-24.
    4. Valadkhani Abbas, 2005. "Sources of Iranian Labour Productivity," Review of Middle East Economics and Finance, De Gruyter, vol. 3(3), pages 32-47, December.
    5. Valadkhani, Abbas, 2006. "Labour Productivity in Iran," Economics Working Papers wp06-13, School of Economics, University of Wollongong, NSW, Australia.
    6. Ben Dolman & Lan Lu & Jyoti Rahman, 2006. "Understanding productivity trends," Economic Roundup, The Treasury, Australian Government, issue 1, pages 35-52, March.
    7. Sakiru Solarin, 2016. "Sources of labour productivity: a panel investigation of the role of military expenditure," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 849-865, March.

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