LABOR PRODUCTIVITY AND ECCONOMIC GROWTH, WHAT CAUSES WHAT: AN EMPIRCAL ANALYSIS

Muhammad Mahmud and Abdul Rashid ()

IBT Journal of Business Studies (JBS), 2006, vol. 2, issue 1, 69-81

Abstract: The paper assesses the dynamic association between output growth and labor productivity growth rates using annual data of the period from 197273 to 200405.The estimates, based on Johansen full• information maximum likelihood technique, indicate that both the rates are cointegrated and move together in the long run.These results are robust to different lag orders.The study then used error correction model to explore the long run as well as short run causal linkages between them.Regarding the long run causation, the estimates of error correction term indicate a unidirectional causation that runs from labor productivity growth rate to output growth.This piece of evidence is suggesting that improving labor productivity would result higher economic growth in Pakistan.Regarding short run causality relationship, the analysis provides evidence based on the estimated Fvalues that there is feedback association between the rates of economic growth and labor productivity growth.

Keywords: economic growth; labor productivity; poverty level; human capital. (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:aib:ibtjbs:v:2:y:2006:i:1:p:69-81

DOI: 10.46745/ilma.ibtjbs.2006.21.6

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