Agriculture Reference
In-Depth Information
3 The Model
The model considered in this study is based on the Verdoorn relationship extended
with new variables considering the Keynesian theory and the literature review
carried out beforehand and summarized in Table 4.1 . Usually the related studies
try to develop a model considering variables from other theories, from a perspective
of linking different approaches. However, in this study variables are taken into
account, related to the Keynesian theory that captures the endogeneity of the
factors, effects of learning by doing and increasing returns to scale. It is considered
that variables such as the wages and salaries [endogeneity of the factors and salary
of efficiency—Fase and Winder ( 1999 ) and Ryzhenkov ( 2009 )], number of persons
employed per enterprise [endogeneity of the factors—Pieper ( 2003 )], share of
employment in manufacturing total [endogeneity of the factors—Alexiadis and
Tsagdis ( 2010 ) and Angeriz et al. ( 2009 )], investment per person employed [invest-
ment, capital, and learning by doing—Le ´ n-Ledesma ( 2002 )], and the share of
R&D employment in the number of persons [capital and learning by doing—Le ´ n-
Ledesma ( 2002 )] can capture these effects. If everything goes as expected by theory
and these variables pick increasing returns to scale, a positive effect from everyone
is expected. The model is presented as follows:
p it ¼
a
þ
bq it þ
c WS it þ
d PEE it þ
e SEM it þ
f IPE it þ
g SRE it
where p is the growth rate of labor productivity and q is the growth rate of the
product. The variables WS, PEE, SEM, IPE, and SRE are, respectively, the wages
and salaries, number of people employed per enterprise, share of employment in
manufacturing total, investment per person employed, and the share of R&D
employment in the number of people. The indexes i and t represent the countries
and the years and a , b , c , d , e , f , and g are coefficients of estimation.
4 The Data
The data is relative to the output, to the number of people employed and to the
wages and salaries, number of people employed per enterprise, share of employ-
ment in manufacturing total, investment per person employed, and the share of
R&D employment in the number of people. This data was obtained from Eurostat
( 2013 ) and are disaggregated for the current 27 European Union countries and for
the period from 1996 to 2008.
Figure 4.1 presents the productivity of the labor growth rate (%) in averages (for
the period considered and for the several forms of manufacturing sectors) for the
current several countries of the European Union.
From Fig. 4.1 it is possible to observe that countries such as France, Luxem-
bourg, and Slovenia present a negative average labor productivity growth rate.
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