Total Labour Requirements and Value Added Productivity of Labour in the Process of Economic Development

Abstract

When the inverse of the value added productivity of labour is regressed on total labour requirements (which is equivalent to labour values), a significant relationship is obtained. This indicates that the value added productivity of labour can be explained by total labour requirements (labour values). The mean value of the regression coefficients is about 1.7. The regression coefficients have a tendency to increase during the process of rapid economic development and to decrease afterwards. Such movements are explained by value added linkages. This study is based on input–output analysis, where total labour requirements per monetary unit of output and the value added productivity of labour are calculated for each of 24 industries in Japan, Korea and USA, every 5 years between 1960 to 1985.

Keywords:

• Total labour requirements
• value added productivity of labour
• value added linkages

Acknowledgement

The author is grateful to Professor Charles Y. Horioka of Osaka University and Professor Erik Dietzenbacher of the University of Groningen for their valuable comments. The author is also grateful to Professor Hiroshi Izumi of Osaka University of Economics for providing data, compiled for our earlier joint work. Any remaining errors are the author's responsibility. This paper was revised while the author was a visiting scholar at the Reischauer Institute of Japanese Studies at Harvard University.

Notes

It should be mentioned that this mathematical formulation is by Professor Erik Dietzenbacher in a private communication.

b _ij  V _i is value added linkages of sector j towards other industries, while b _ji  v _j is value added linkages towards own sector.