Did the Verdoorn Law Hang on Japan

Nancy Wulwick
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Nancy Wulwick: Old Dominion University

Eastern Economic Journal, 1991, vol. 17, issue 1, 15-20

Abstract: Kaldor (1966) presented Verdoorn "law," having found a statistically significant relation between manufacturing productivity growth and manufacturing output growth using least squares on a small postwar sample that included Japanese data. Rowthorn (1975) claimed that the Verdoorn "law" fell apart when manufacturing employment growth was the independent variable and Japan was removed from Kaldor's sample. This paper shows if output growth is independent of the random error term, then the maximum likelihood estimates of Kaldor's equation arrived at by least squares are sufficient to determine the maximum likelihood estimates and the statistical significance of Rowthorn's equation. It is wrong in this context to say that the "law" fell apart.

Keywords: Employment; Output (search for similar items in EconPapers)
JEL-codes: E23 E24 (search for similar items in EconPapers)
Date: 1991
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:17:y:1991:i:1:p:15-20

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