Productivity growth, Smith effects and Ricardo effects in Euro Area's manufacturing industries

Abstract

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Financialisation and the slowdown of labour productivity in Portugal: A post-Keynesian approach

“…This effect sustains that labour productivity positively depends on economic growth due to the increasing returns to scale (Kaldor, 1957). According to Labini (1999) and Carnevali et al (2020), this effect also captures the extent of the market which, in turn, influences the division of labour by allowing workers to focus on and specialise in specific tasks, thereby promoting an increase in labour productivity.…”

“…The first reason is that an increase in labour income share represents an incentive for a more efficient organisation of the production process and for the adoption of new technological investments in order to lower production costs; this allows an increase in production even without an increase in the number of workers and the corresponding acceleration of labour productivity (Webb, 1912;Labini, 1984Labini, , 1999Altman, 1998). This is the so-called 'organisation effect' (Carnevali et al, 2020). Second, an increase in labour income share reduces the 'xinefficiencies' by favouring an improvement in working conditions, the establishment of more cooperative labour relations, higher motivation and lower levels of turnover which are reflected in greater discipline and effort by the workers and an acceleration of labour productivity (Altman, 1998).…”

“…From an empirical point of view, several works have emerged which assess the determinants of labour productivity (Fortune, 1987;Vergeer and Kleinknecht, 2014;Micallef, 2016;Tridico and Pariboni, 2018;Dua and Garg, 2019;Pariboni and Tridico;Carnevali et al, 2020;Yousef, 2020). However, the majority of these empirical works do not assess all four channels through which the phenomenon of financialisation has impaired labour productivity.…”

Price mechanism and endogenous productivity in an open economy stock‐flow consistent model

“…The constant of the productivity equation ( ) is set at a level which allows the equation to returns an initial level of productivity (1.286143) pretty close to the constant used in the original OPENFLEX model (1.3333). However, far from being a purely “symbolic homage” to Verdoorn, roughly reflects the empirical evidence on the “Smith effect” that can be found in the most recent literature (Carnevali, Godin, Lucarelli, & Veronese Passarella, 2020; Magacho & McCombie, 2017). Indeed, as it has been already said in Section 3, recent estimates tend to confirm the first estimate made by Verdoorn, who noted that a change in the volume of production by 10% tends to be followed by an average increase of the productivity of nearly 4.5% (Verdoorn, 1949).…”

“…Paolo Sylos Labini's equation of productivity (Sylos Labini, 1984, 1995) and the abundant research related to it also belongs to the same trend. Sylos tried to integrate the principle of the Verdoorn‐Kaldor's law with technological innovation and cost of labour; in recent years several empirical studies have provided new evidence to his theory (see, for instance, Carnevali, Godin, Lucarelli, & Veronese Passarella, 2020; Corsi & D'Ippoliti, 2013; Guarini, 2007, 2009).…”