Labour Productivity Growth Research Articles

The effect of bank recapitalization policy on credit allocation, investment, and productivity: Evidence from a banking crisis in Japan

This paper examines the ramifications of government capital injections into financially distressed banks during the 1997 Japanese banking crisis. Using a dataset merging firm-level financial statements and bank balance sheets, we explore whether the capital injections primarily benefited high-productivity firms or were misallocated to struggling “zombie” firms. The results suggest that post-injection banks increased lending to high-productivity non-zombie and low-productivity zombie firms. The former aligns with conventional theories prioritizing high-productivity firms for investment and productivity enhancement; the latter suggests credit misallocation toward struggling firms mainly for debt servicing. There is no evidence that these injections promoted investments among firms. The results indicate that zombie firms reduced investments, particularly in infrastructure. High-productivity non-zombie firms did not exhibit a significant investment boost despite receiving more loans but displayed positive labor and total factor productivity growth, potentially driven by sales growth and increased advertisement expenses rather than employment and wage adjustments.

The role of wages in triggering innovation and productivity: A dynamic exploration for European economies

This paper addresses the issue of sluggish productivity growth in advanced countries and investigates its underlying causes, focusing on the direct impact of real wages. Analyzing data from 14 European countries spanning 1995 to 2018, we employ Local Projections to estimate the Sylos Labini productivity equation. Advancing our understanding of established literature, we dynamically explore the wage-productivity nexus, testing the hypothesis that higher wages enhance productivity independently of aggregate demand. Our findings indicate that wages exert a persistent and direct positive effect on productivity, both at the aggregate and sectoral levels. This effect remains stable over time, even with large changes, and is more pronounced during periods of low or negative wage growth. Moreover, higher wages prove to stimulate innovation more effectively in core countries. These findings suggest that demand-side expansionary policies would be more effective in enhancing labor productivity and long-term growth when combined with policies promoting wage growth.

Knowledge creation, knowledge impact and knowledge diffusion: how do they connect with higher education?

Knowledge-based economy causes changes in the higher education system: university graduates must have the ability to constantly learn and improve their skills, generate and disseminate new knowledge, form and multiply the knowledge capital of business. This paper aims to investigate a pairwise interconnection between higher education indicators and sets of parameters characterizing knowledge creation, impact, and diffusion. The following higher education indicators are used: expenditure on education, tertiary enrollment, graduates in science and engineering, tertiary inbound mobility, researcher, gross expenditure on R&D, top 3 global corporate R&D investors, top 3QS university ranking. Knowledge creation indicators are patents by origin, PCT patents by origin, utility models by origin, scientific and technical articles, citable documents, H-index. Knowledge impact is characterized through labor productivity growth, new businesses, software spending, ISO 9001 quality certificates, high-tech manufacturing. Knowledge diffusion parameters include intellectual property receipts, production and export complexity, high-tech exports, ICT services exports. The information base of the study is the data of the Global Innovation Index Report from the World Intellectual Property Organization for 40 European countries (selected depending on the availability of statistics) for 2022, research method – Canonical Correlation Analysis. The strongest positive correlation was found between higher education indicators and knowledge creation parameters. The second position takes connection between higher education indicators and knowledge diffusion parameters, the third – between higher education indicators and knowledge impact indicators. Among the higher education indicators, the most significant were gross expenditure on R&D, top 3 global corporate R&D investors, top 3 QS university ranking.

Employment protection and labour productivity growth in the EU: skill-specific effects during and after the Great Recession

Does employment protection affect sectoral productivity growth differently during crises and recovery periods? This paper sheds light into this question by investigating the relationship between employment protection legislation (EPL hereafter) and sectoral labour productivity growth in the EU in the context of the Great Recession. We consider the crisis and recovery periods, evaluate the relevance of both levels and changes in EPL for productivity growth, and explore the conditioning role played by sectoral differences in terms of cumulativeness of knowledge as well as the skills of the labour force, captured by different levels of education. We find that stricter labour protection reduces labour productivity growth in sectors with a large share of workers with tertiary education, whereas this effect is negligible or positive in sectors where workers with secondary or only primary education are more prevalent (such as agriculture, mining and quarrying). We attribute this to a more intensive labour hoarding in the former, as EPL strengthens labour hoarding in sectors that rely on firm-specific knowledge accumulation and skilled human capital that are difficult to substitute with physical capital. Whereas it is simple to dismiss (and to find later) unskilled employees. They not only can be substituted more easily with capital, but also the costs of their firing are lower, they are overrepresented among workers holding temporary contracts, and they might be unequally informed and able to exercise their rights. This leads to low (if any) labour hoarding and little impact of EPL on labour productivity in such sectors. We also document that the negative effect is prominent only during the crisis, and an increase in the stringency of EPL over an extended period stimulates employers to substitute labour with investments in physical and knowledge capital.

An analysis of ICT hardware manufacturing in industrialized economies: Growth patterns, productivity performance, and driving Forces

We employ growth accounting and data from the 2019 release of the EUKLEMS database to systematically quantify the primary contributors to value-added and labor productivity growth within the Information and Communication Technology Manufacturing (ICTM) industry across 13 industrialized economies between 2000 and 2015.Our analysis reveals that total factor productivity, labor quality, investments in software, and research and development emerge as the primary drivers of growth. Additionally, when compared to the overall manufacturing sector, the ICTM industry has undergone more extensive restructuring in most economies under examination.Moreover, the study highlights a substantial and widespread adverse impact of the 2008–2009 global financial crisis (GFC) and its aftermath on the ICTM industry. In addition, the United States stands out as a leading player in ICTM's productivity performance, resulting in a considerable gap between the EU and the US in this regard, and the US exhibiting stronger resilience in ICTM labor productivity growth during the crisis-affected period, with total factor productivity playing an essential role.Drawing from its findings, the study offers several policy insights to advance the ICT manufacturing industry in industrialized economies. They encompass strategies to strengthen industry growth drivers and support for ongoing restructuring efforts in response to challenges arising from rapid technological change as well as more intense global competition.

Does real exchange rate matter better than trade volumes in triggering labour productivity growth? Evidence from Ethiopia

Does real exchange rate matter better than trade volumes in triggering labour productivity growth? Evidence from Ethiopia

Rizikos kapitalo investicijų poveikio šalių darbo produktyvumui vertinimas

The study expands and complements the theoretical and practical aspect of relevant scientific research on the impact of venture capital investments on the countries labour productivity. Researchers have found that innovation leads to the growth of countries labour productivity because innovation creates new products and technologies. It has been established that innovation is closely related to venture capital investments. With the help of innovations that require venture capital investments, a larger production volume is produced, which is associated with an increase in labour productivity. Ensuring financing of innovative companies has a positive external impact on the economy and, at the same time, on labour productivity, so it makes sense for governments to take measures to increase the volume of venture capital investments. Considering to the gap of research on the assessment of the impact of venture capital investments on labour productivity at the macroeconomic level, this article assesses the impact of venture capital investments on labour productivity in the EU-25 countries. Keywords: venture capital investments, EU countries, innovation, labour productivity.

Влияние отраслевой структуры на динамику производительности труда в экономике США

The importance of labor productivity growth increases in the context of economic regionalization, which requires an economy-wide restructuring. In the United States of America, which continues its policy of reindustrial development, protectionism, and the suppression of competing countries by all means, the role of the structural factor in the dynamics of labor productivity is not uniform. The paper presents a theoretical analysis and methodological possibility of calculating the relationship between such economic categories and processes as labor productivity and its decline in the US economy, on the one hand, and structural changes in the American economy, on the other hand. Based on the use of the index method with the conversion of material resources into labor costs, an attempt was made to empirically identify the different impacts of specific industries (sectors) of the US economy on changes in labor productivity. The chronological period for calculating the system of necessary indices takes into account 2005 as the base year used for comparison with 2022. The results obtained indicate the beginning of a “reindustrial turn” in the US economy, which created the basis for the gradual recovery of the lost growth rates of labor productivity, together with the sector of information and communication services. It is noted that the movement of workers with relatively low qualifications from the manufacturing sectors of the American economy to the service sector, along with an increase in working hours, contributes to a decrease in labor productivity in a number of service industries. An increase in the role of the structural factor in the dynamics of labor productivity in those industries that most actively respond to the possibility of reducing labor costs in the context of growing technologization of economic activity is revealed. The conclusion is made about the information-industrial orientation of the structural changes observed in the United States over the period under study, which provides for a structural transformation of the labor market in the direction of increasing the efficiency of labor costs per unit of working time.

How generative artificial intelligence technologies shape partial job displacement and labor productivity growth

How generative artificial intelligence technologies shape partial job displacement and labor productivity growth

Развитие цифровых технологий и производительности труда средних предприятий России (In Eng.)

Economically developed countries develop pilot projects aimed at developing entrepreneurship and improving labor productivity through the use of modern technologies. In this regard, the state's policy focus on addressing the issue of labor productivity growth and bridging the technological gap between the country and advanced economies has brought attention to the need for discovering new avenues and resources to enhance labor productivity in Russia. The goal of this work is to identify the dependencies between the development of digital technologies and the labor productivity of medium-sized enterprises in Russia and its regions. The study confirmed the following hypotheses: there is a correlation between the share of companies using the Internet and labor productivity of medium-sized enterprises in Russia. ICT costs in Russia have a rather strong impact on the labor productivity of medium-sized enterprises. The study results can be used to identify those digital technologies indicators that have the greatest impact on labor productivity growth of medium-sized enterprises, which can be used to improve regional aspects of innovative development of the country's economy.

법인세의 분배효과에 관한 연구

This study analyzes the effect of corporate income tax on income distribution in Korea. Studies on the economic effects of corporate income tax have mainly focused on investment and employment effects. This research trend is due to the prevailing idea that the investment effect of corporate income tax is decisive, employment and wages are determined incidentally, and that companies are merely conduits for distributing profits to shareholders. However, corporate income tax also affects the labor income share and household income distribution through changes in employment and wages, dividends, and internal reserve fund of a company. If corporate income tax cuts increase investment, but employment growth is weak and real wage growth rates falls short of labor productivity growth rates, the labor income share will decrease and household income inequality will widen. According to the results of the empirical research, the effects of corporate income tax rate on investment and employment are weak. The expanded investment is also capital-intensive, so the employment effect is not significant, and more the real wage increase does not keep up with labor productivity. As a result, a reduction in the effective corporate income tax rate lowers the labor income share and increases income inequality. Therefore, to increase the distribution effect of corporate income tax, corporate income tax should be reformed in a way that supports employment growth and real wage increases while including investment.

The nonlinear impacts of aging labor and government health expenditures on productivity in ASEAN+3 economies

The aging of the workforce has become a paramount concern for ASEAN+3’s productivity. In response, government health expenditure emerges as a potential solution. However, the existing literature has generated inconclusive results and has yet to reveal the mechanisms and potential nonlinear effects of these factors on productivity. This study addresses this gap by examining the impact of changes in the proportion of the working-age population and government health expenditures on productivity growth, using data from ASEAN+3 countries over the period 2008–2009. Employing a robust methodology, we utilize several panel threshold regression models to derive statistically sound inferences and consistent parameter estimates. Our investigation reveals that government health expenditure effectively enhances productivity when the old labor force participation rate is below 51.352%. However, this effect loses significance at higher levels of the aging workers’ proportion. Additionally, we identify an optimal government health expenditure range of 1.906% to 2.859% of GDP, signifying a positive correlation with labor productivity growth.

Industrial policy and labour productivity growth in Africa: does the technology choice matter?

The persistent gaps in African sectoral labour productivity and the disappointing growth in the manufacturing and service sectors have revived interest among academics and policymakers. In search of ways to boost labour productivity, this study explores how the technology choice as a proxy for industrial policy can affect labour productivity growth. First, I identify the different sources of growth with the decomposition method of shift–share analysis and a recent dataset from 1960 to 2017 of nine sectors. Then I investigate the impact of comparative advantage development strategy on growth components (within effects and structural effects). The shift and share decomposition analysis results suggest a changing role of growth components. While the structural change effect is driven by the “static gains” which still plays an important role, the within effect has been more prevalent during the MDGs and SDGs period. The empirical results indicate that defying comparative advantage hinders the within effect component mitigated by a weak and positive dynamic effect component. The evidence emphasises the design of industrial development based on the comparative advantage in SSA, complemented with policies and strategies aiming at increasing labour productivity in the agriculture sector due to its large employment share.

Patterns and drivers of financial sector growth in the digital age: Insights from a study of industrialized economies

The financial sector in advanced economies has undergone significant evolution driven by restructuring, globalization, and the digital revolution, which have profoundly shaped its developmental dynamics. This study investigates the forces behind the growth and convergence of the financial sector across 13 advanced economies from 2000 to 2015, focusing on the effects of digital transformation. The investigation unveils several noteworthy findings concerning the financial sector. First, most nations experienced substantial growth in value-added, coupled with a significant decrease in employment and robust advancements in labor productivity. Next, the primary drivers of labor productivity growth and convergence across many economies were driven by total factor productivity, labor quality, and digital transformation. Lastly, digital transformation not only directly contributed to the augmentation of labor productivity, as quantified through growth accounting estimation, but also wielded a considerable impact on the expansion of total factor productivity and the streamlining of the workforce.

Presence of spatial ambiguity of labor productivity in the context of regions in modern Russia: problems, actions

In modern socio-economic conditions, there is a significant interregional inequality in the field of changing labor productivity. In the regions, leaders have an increase in labor productivity, in the regions of antileaders there is a drop. Labor productivity is one of the key conditions for improving the efficiency of the regional economy. The innovative development of existing production facilities, an increase in the technical and technological level, the creation of new highly efficient jobs is one of the key conditions for the growth of labor productivity. A significant factor in the positive dynamics of labor productivity growth is the activation of human resources, the development of human capital and the human potential of workers, which will lead to an increase in the productivity of their work.

The Kaldor–Verdoorn law at the age of robots and AI

This paper contributes to the literature around the Kaldor–Verdoorn law and analyses the impact of robotisation on the channels through which the law shapes labour-productivity growth. We start with a simple evolutionary reinterpretation of the law that combines Kaldorian and neo-Schumpeterian arguments. We then apply a GMM estimator to a panel of 17 industries in 25 OECD capitalist economies for the period 1990–2018. After elaborating on the general evidence of the evolutionary interpretation of the law, the estimates suggest a positive influence from robotisation: a higher robot density strengthens both the channel that ties labour productivity dynamics with mechanisation, and the one connected with the general advancement of science and technology which joins productivity to aggregate demand. This overall result is robust to several specifications of the underlying econometric model. Moreover, we find some evidence of technological unemployment out of the macroeconomic factor. Results agree with the empirical literature that suggests different impacts from robotisation on the basis of the level of economic activity considered.

Market power, output, and productivity

I document a positive correlation between increases in markups and growth of output, value added, and labor productivity at the 3-digit sector level using national accounts data from Mexico. Additionally, I show that those results can be partly accounted for by the positive correlation between increases in markups and total factor productivity growth. Taken together, the findings provide new evidence that a rise of market power can be associated with positive welfare effects and not only with negative outcomes of reduced competition.

Dynamics of Labour Use in Cotton Farming in India: An Economic Appraisal

In India, a large proportion of the workforce is still dependent on the agricultural sector (63.32% employment share in 1990-91, which reduced further to 42.61% in 2019-20. A gradual diminishing pattern has been observed in percentage of agricultural workers to the total workforce in the country and it is projected to reach 25.7% by 2050 creating a critical shortage of farm labour. This paper is intended to understand the dynamic changes in the labour utilization, farm mechanisation and labour productivity across the States in cotton farming during the years 2007 to 2019 by using cost of cultivation scheme data. Eleven major cotton growing States have been selected for the study. The data on cost of cultivation scheme of Government of India was used to calculate the changes in crop profitability, labour use, labour costs and labour productivity indices. In spite of increased growth in wage rate, the labour productivity growth is not that significant in most of the States. Selective mechanization wherein the labour shortage is crucial affecting the crop productivity should be identified and given impetus.

Проектный подход-инструмент повышения эффективности субъектов предпринимательства аграрной сферы

The article examines the project approach as a tool to improve the efficiency of entrepreneurial activity of participants in the national project "Labor Productivity and Employment Increase". The results of the analysis of agricultural organizations, distributed by characteristics, showed that they differ both in the core type of activity (cultivation of grain and leguminous crops; breeding of pigs and poultry; provision of services, etc.) and in scale (small, medium and large enterprises). Moreover, the same agricultural organization, depending on the criterion of attribution to a business entity, may have an average size in terms of the number of employees and a small one in terms of sales revenue. The differentiation in the growth rate (decrease) of labor productivity is determined, calculated: 1) by sales revenue; 2) at net value added. In the first embodiment, the value of labor productivity is influenced by changes in the volume and price of sales. The results of the analysis confirm that in agricultural organizations in which labor productivity growth has been achieved, measures have been taken to optimize technological processes.

Does the Secular Stagnation hypothesis match the data? Evidence from the USA

This paper focusses on Secular Stagnation in the United States. It answers to two research questions. First: is Secular Stagnation a fact? Second: conditional to the previous reply, how does the literature meet the qualitative and quantitative evidence? I focus on historical annual data related to the USA from 1870 onwards. The contribution to the debate is manifold. Firstly, I provide a careful systematization of the concept and explain why this definition is crucial for the topic analysis. Secondly, I talk about Secular Stagnation in terms of labor and multifactor productivity growth: their decline since the 1970s is not comparable to any previous shortfall. Thirdly, the definition allows to evaluate whether present-day debates on the phenomenon are supported by data, but it also lets to disentangle the most relevant channels through which Secular Stagnation emerges. Therefore, I carry out a comparative validation exercise on the different lines of thought. Finally, as long as Secular Stagnation is confirmed as empirical evidence, also policy implications can be drawn from the different theoretical frameworks. Despite the several contrasting approaches and viewpoints, I trace out a complementary in policy implications.