The Aggregate Production Function and Productivity Growth: Verdoorn's Law Revisited

Gary Jefferson

Oxford Economic Papers, 1988, vol. 40, issue 4, 671-91

Abstract: This paper expands the Verdoorn model to include factor substitutes for labor, short-run productivity dynamics, and specific economic processes through which the growth of output may induce productivity growth. The paper compares the level and rate-of-change versions of three models. Estimated with U.S. manufacturing data, the level version of a model incorporating scale economies, economies of agglomeration, and learning-by-doing outperforms the other models. The retardation of scale effects during 1974-83 is found to explain most of the productivity slowdown during this period. Copyright 1988 by Royal Economic Society.

Date: 1988
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