Abstract
This paper examines recent theoretical justification of Verdoorn's law and suggests a derivation of Verdoorn's law in the form P̂= aQ̂+ b which requires only the assumption K̂=γ a constant. This derivation is generalised to include the effect of the efficient use of labour on productivity change. The manufacturing industries of the United Kingdom, West Germany and the United States are analysed on the basis of the theory.
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