The driving force of labor productivity

TL;DR

This paper models labor productivity in developed countries as a secondary variable driven by economic growth, demonstrating its predictability over an 11-year horizon through analysis of multiple nations.

Contribution

It introduces a model linking labor productivity to GDP per capita and labor force participation, validated across several developed countries.

Findings

Labor productivity is a function of GDP per capita.

The model accurately predicts productivity evolution over 11 years.

Results are consistent across the U.S., Japan, France, UK, Italy, and Canada.

Abstract

Labor productivity in developed countries is analyzed and modeled. Modeling is based on our previous finding that the rate of labor force participation is a unique function of GDP per capita. Therefore, labor productivity is fully determined by the rate of economic growth, and thus, is a secondary economic variable. Initially, we assess a model for the U.S. and then test it using data for Japan, France, the UK, Italy, and Canada. Results obtained for these countries validate those for the U.S. The evolution of labor force productivity is predictable at least at an 11-year horizon