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Kaldor-Verdoorn's Law and Increasing Returns to Scale: A Comparison Across Developed Countries

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  • Millemaci, Emanuele
  • Ofria, Ferdinando

Abstract

The objective of this study is to investigate the validity of the Kaldor-Verdoorn’s Law in explaining the long run determinants of the labor productivity growth for the manufacturing sector of some developed economies (Western European Countries, Australia, Canada, Japan and United States). We consider the period 1973-2006 using data provided by the European Commission - Economics and Financial Affairs. Our findings suggest that the law is valid for the manufacturing as countries show increasing returns to scale. Capital growth and labor cost growth do not appear important in explaining productivity growth. The estimated Verdoorn coefficients are found to be substantially stable throughout the period.

Suggested Citation

  • Millemaci, Emanuele & Ofria, Ferdinando, 2012. "Kaldor-Verdoorn's Law and Increasing Returns to Scale: A Comparison Across Developed Countries," Economy and Society 143122, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemso:143122
    DOI: 10.22004/ag.econ.143122
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    Cited by:

    1. João Prates Romero, 2016. "Increasing Returns To Scale, Technological Catch-Up And Research Intensity: An Industry-Level Investigation Combining Eu Klems Productivity Data With Patent Data," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 102, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Giorgio Fazio & Enza Maltese & Davide Piacentino, 2013. "Estimating Verdoorn law for Italian firms and regions," Letters in Spatial and Resource Sciences, Springer, vol. 6(1), pages 45-54, March.
    3. Alberto Bagnai, 2016. "Italy’s decline and the balance-of-payments constraint: a multicountry analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 1-26, January.
    4. Giulio Guarini & Giuseppe Garofalo & Alessandro Federici, 2014. "A Virtuous Cumulative Growth Circle among Innovation, Inclusion and Sustainability? A Structuralist-Keynesian Analysis with an Application on Europe," GREDEG Working Papers 2014-39, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    5. Gerald Friedman, 2017. "A Future for Growth?," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(4), pages 652-662, December.
    6. Ferdinando Ofria, 2012. "Twelve Years on from the Adoption of the Emu: An Ex-Post Assessment on the Process of Convergence of Southern and Central-Northern Italy," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(Special 1), pages 326-339, May.
    7. Millemaci, Emanuele & Ofria, Ferdinando, 2016. "Supply and demand-side determinants of productivity growth in Italian regions," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 138-146.
    8. M. Centorrino & F. Ofria & D. Farinella, 2010. "Convergence and divergence processes between the Mezzogiorno and the Centre- North ten years after the adoption of the EMU," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3, pages 453-486.
    9. Someshwar Rao & Jiang Li, 2013. "Explaining Slower Productivity Growth: The Role of Weak Demand Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 26, pages 3-19, Fall.

    More about this item

    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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