Kaldor-Verdoorn’s Law and Increasing Returns to Scale: A Comparison Across Developed Countries
Date
16.11.2012
16.11.2012
Authors
Emanuele Millemaci, Ferdinando Ofria
JEL Code
C32, O47, O57
C32, O47, O57
Keywords:
Increasing Returns, Kaldor-Verdoorn Law, Productivity Growth, Manufacturing Sector
Increasing Returns, Kaldor-Verdoorn Law, Productivity Growth, Manufacturing Sector
Publisher
Economy and Society
Economy and Society
Editor
Giuseppe Sammarco
Giuseppe Sammarco
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.