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Did the Verdoorn Law Hang on Japan

Author

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  • Nancy J. Wulwick

    (Old Dominion University)

Abstract

Kaldor (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.

Suggested Citation

  • Nancy J. Wulwick, 1991. "Did the Verdoorn Law Hang on Japan," Eastern Economic Journal, Eastern Economic Association, vol. 17(1), pages 15-20, Jan-Mar.
    • Handle: RePEc:eej:eeconj:v:17:y:1991:i:1:p:15-20
    as

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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume17/V17N1P15_20.pdf
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    References listed on IDEAS

    as
    1. Arthur M. Okun, 1973. "Upward Mobility in a High-Pressure Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(1), pages 207-262.
    2. 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.
    3. Rowthorn, R E, 1975. "What Remains of Kaldor's Law?," Economic Journal, Royal Economic Society, vol. 85(337), pages 10-19, March.
    4. 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.
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    Cited by:

    1. Jordi Pons-Novell & Elisabet Viladecans-Marsal, 1999. "Kaldor's Laws and Spatial Dependence: Evidence for the European Regions," Regional Studies, Taylor & Francis Journals, vol. 33(5), pages 443-451.
    2. 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.
    3. Gianfranco Piras & Paolo Postiglione & Patricio Aroca, 2012. "Specialization, R&D and productivity growth: evidence from EU regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(1), pages 35-51, August.
    4. Paolo Postiglione & Maria Simona Andreano & Roberto Benedetti, 2017. "Spatial Clusters in EU Productivity Growth," Growth and Change, Wiley Blackwell, vol. 48(1), pages 40-60, March.

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    More about this item

    Keywords

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    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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