The UK (and Western) Productivity Puzzle: Does Arthur Lewis Hold the Key?

Nicholas Oulton

No 1809, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: I propose a new explanation for the UK productivity puzzle. I graft the Lewis (1954) model onto a standard Solow growth model. What I call the neo-Lewis model is identical to the Solow model in good times. But in bad times foreign demand for a country’s exports is constrained below potential supply. This makes labour productivity growth depend negatively on the growth of labour input. I also argue that the neo-Lewis model can explain the fall in TFP growth, in the UK and elsewhere, after 2007. The predictions of the neo-Lewis model are tested on data for 23 advanced countries and also on a larger sample of 52 countries and find support.

Keywords: Productivity; Slowdown; TFP; Capital; Lewis; Immigration (search for similar items in EconPapers)
JEL-codes: E24 F43 F44 J24 O41 O47 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2018-03
New Economics Papers: this item is included in nep-eff, nep-his, nep-hpe, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The UK and Western Productivity Puzzle: Does Arthur Lewis Hold the Key? (2019)
Working Paper: The UK (and Western) productivity puzzle: does Arthur Lewis hold the key? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cfm:wpaper:1809

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