Why has the Employment-Productivity Tradeoff among Industrialized Countries been so strong?

Abstract

This paper is motivated by a set of cross-country observations on labor productivity growth among industrial countries over the period . In particular, we show that over this period, the speed of convergence among industrialized countries has decreased substantially while the negative effect of a country's own employment growth (or labor force growth) on labor productivity has increased dramatically. The main contribution of the paper is to show how these observations are consistent with the view that industrialized countries have been undergoing a particularly drastic technological revolution over the recent past. In effect, we show how the process of endogenous technological adoption, following the diffusion of a general purpose technology, can explain these observations by causing the emergence of an AK accumulation phase where demographic factors temporarily become an major determinant of labor productivity growth. Our estimation of the model implies that the AK phase has been in effect since the early to mid-seventies, but that this phase may now be coming to an end. An important contribution of the paper is to analyze growth experiences across advanced industrialized countries within an open economy framework and to evaluate the explanation by estimating a multicountry dynamic general model.

Changes in the World Distribution of Output Per Worker, 1960–1998: How a Standard Decomposition Tells an Unorthodox Story

“…For OECD countries, we have examined the potential biases induced by not taking into account differences across countries in participation rates. We found that using a direct measure of number of workers for OECD countries provides even stronger evidence in favor of the main claim of the paper than that found using population data (see Beaudry and Collard [2002]). Figure 1 reports the distribution of (log) output per worker across the set of NSSA countries in 1960 and 1998.…”

“…We also explored window sizes between 15 to 25 years, all of which led to similar conclusions. In Beaudry and Collard [2002] this approach was used to examine changes in the growth process among OECD country's. …”

Trade Liberalisation, Labour Productivity Growth and Skilled Labour Complement: Evidence from the Thai Manufacturing Sector

“…A temporary setback occurred during the Asian crisis in 1997/98, but it was corrected afterwards. Statistics in general show that (1) the labour productivity of the manufacturing sector has been increasing over time, (2) there are widespread mismatches among the share of manufacturing growth and the share of manufacturing employment, indicating a possible expansion of skilled employment.…”

“…Beaudry and Collard [2], for example, explain that reducing controls on trade causes a drastic technological change, and makes human capital the factor for determining the growth in labour productivity while also raising the demand for more skilled workers. Davis and Harrigan [5] explained that trade liberalisation and productivity have been found to be biased toward skilled workers.…”

Application of correspondence analysis to the identification of the influence of features of unemployed persons on the unemployment duration

“…The characteristic of labour demand is the big diversification according to the sectoral, spatial and professional structures [Batóg et al 2016]. The share of labour in the national product that depends on the level of labour productivity, minimal wage and hours worked influences the number of employed persons as well as the number of unemployed persons [Beaudry and Collard 2002;Izyumov and Vahaly 2014: 697].…”