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Decomposition of Labor Productivity Growth: A Multilateral Production Frontier Approach

  • Konstantinos Chatzimichael

    ()

    (Dept of Economics, University of Crete, Greece)

  • Vangelis Tzouvelekas

    ()

    (Department of Economics, University of Crete, Greece)

This paper develops a parametric decomposition framework of labor productivity growth relaxing the assumption of labor-specific efficiency. The decomposition analysis is applied to a sample of 52 developed and developing countries from 1965-90. A generalized Cobb-Douglas functional specification is used taking into account differences in technological structures across group of countries to approximate aggregate production technology using Jorgenson and Nishimizu (1978) bilateral model of production. Measurement of labor efficiency is based on Kopp�s (1981) orthogonal non-radial index of factor-specific efficiency modified in a parametric frontier framework. The empirical results indicate that the weighted average annual rate of labor productivity growth was 1.43 per cent over the period analyzed. Technical change was found to be the driving force of labor productivity, while improvements in labor efficiency and human capital account approximately for the 22 per cent of that productivity growth.

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Paper provided by University of Crete, Department of Economics in its series Working Papers with number 1009.

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Date of creation: 01 Jul 2010
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Handle: RePEc:crt:wpaper:1009
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