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Scaling Laws in Labor Productivity

Author

Listed:
  • Yoshi FUJIWARA
  • Hideaki AOYAMA
  • Mauro GALLEGATI

Abstract

Empirical study of firms' growth and fluctuation requires the understanding of the dynamics of labor and productivity among firms by using large-scale data including that of small and medium-sized enterprises (SMEs). Specifically, the key to such understanding is the findings in statistical properties in equilibrium distributions of output, labor, and productivity. We uncover a set of scaling laws of conditional probability distributions, which are sufficient for characterizing joint distributions by employing an updated database covering one million firms including domestic SMEs. These scaling laws show the existence of lognormal joint distributions for sales and labor, and the existence of a scaling law for labor productivity, both of which are confirmed empirically. This framework offers characterization of equilibrium distributions with a small number of scaling indices, which determine macroscopic quantities, thus opening a new perspective of bridging microeconomics and macroeconomics.

Suggested Citation

  • Yoshi FUJIWARA & Hideaki AOYAMA & Mauro GALLEGATI, 2012. "Scaling Laws in Labor Productivity," Discussion papers 12040, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:12040
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    References listed on IDEAS

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    4. Foley Duncan K., 1994. "A Statistical Equilibrium Theory of Markets," Journal of Economic Theory, Elsevier, vol. 62(2), pages 321-345, April.
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