Kaldor-Verdoorn's Law and Increasing Returns to Scale: A Comparison Across Developed Countries
Emanuele Millemaci, Dipartimento DESMaS “V. Pareto”, Università degli Studi di Messina, Italy
Ferdinando Ofria, Dipartimento DESMaS “V. Pareto”, Università degli Studi di Messina, Italy
Summary The objective of this study is to investigate the validity of the Kaldor-Verdoorn’s Law in explaining the long run determinants of the labor productivity growth for the manufacturing sector of some developed economies (Western European Countries, Australia, Canada, Japan and United States). We consider the period 1973-2006 using data provided by the European Commission - Economics and Financial Affairs. Our findings suggest that the law is valid for the manufacturing as countries show increasing returns to scale. Capital growth and labor cost growth do not appear important in explaining productivity growth. The estimated Verdoorn coefficients are found to be substantially stable throughout the period.
Emanuele Millemaci and Ferdinando Ofria,
"Kaldor-Verdoorn's Law and Increasing Returns to Scale: A Comparison Across Developed Countries"
(January 14, 2013).
Fondazione Eni Enrico Mattei Working Papers.
Working Paper 743.