Measuring total labour productivity in the open economy: A proposal
DOI:
https://doi.org/10.13133/2037-3643/18495Keywords:
Pasinetti, open economy, Total Labour Productivity, Input-OutputAbstract
In the classical approach, one of the main measures of productivity is the so-called 'total labour productivity' (TLP), which can be computed as the reciprocal of the vertically integrated labour required to produce one unit of net output. In closed economies, this index changes exclusively due to technical progress. However, in open economies, where intermediate imports are required for the production of national output, changes in TLP may reflect changes in sourcing practices, which do not necessarily represent technical progress but rather the reorganization of production chains. To account for these new sources of productivity, Pasinetti proposed considering the quantity of domestic labour embedded in exports that is employed to finance imports. Building on this idea, this paper develops an 'adjusted' measure of TLP that corrects the effect of imports on productivity and studies its properties. We compare this measure to other indices related to TLP and highlight its relevance for empirical analysis.
References
Baldwin R. (2016), The Great Convergence: Information Technology and the New Globalization, Cambridge (MA, USA): Harvard University Press.
Brondino G. (2018), “Productivity growth and structural change in China (1995–2009): A subsystems analysis”, Structural Change and Economic Dynamics, 49, pp. 183-191.
Brondino G. and Dvoskin A. (2023), “An appraisal of alternative Ricardian trade models”, Review of Political Economy, pp. 1-22. Available online.
Carrascal-Incera A. (2017), “Drivers of change in the European youth employment: a comparative structural decomposition analysis”, Economic Systems Research, 29(4), pp. 463-485.
Chapman S.D. (1972), The Cotton Industry in the Industrial Revolution, London: Macmillan.
Crespo E., Dvoskin A. and Ianni G. (2021), “Exclusion in ‘Ricardian’ Trade Models”, Review of political economy, 33(2), pp. 194-211.
De Juan O. and Febrero E. (2000), “Measuring productivity from vertically integrated sectors”, Economic Systems Research, 12(1), pp. 65-82.
Deardorff A.V. (2005), “Ricardian comparative advantage with intermediate inputs”, The North American Journal of Economics and Finance, 16(1), pp. 11-34.
Dietzenbacher E., Hoen A.R. and Los B. (2000), “Labor productivity in Western Europe 1975–1985: an intercountry, interindustry analysis”, Journal of Regional Science, 40(3), pp. 425-452.
Elmslie B. and Milberg W. (1996), “The productivity convergence debate: A theoretical and methodological reconsideration”, Cambridge Journal of Economics, 20(2), pp. 153-182.
Elmslie B. and Milberg W. (1992), “International trade and factor intensity uniformity: an empirical assessment”, Weltwirtschaftliches Archiv, 128(3), pp. 464-486.
Farjoun E. and Machover M. (1985), “Probability, economics and the labour theory of value”, New Left Review, 152, pp. 95-108.
Findlay R. and O’Rourke K.H. (2007), Power and Plenty: Trade, war and the world economy in the second millennium, Princeton (NJ): Princeton University Press.
Flaschel P., Franke R. and Veneziani R. (2013), “Labour productivity and the law of decreasing labour content”, Cambridge Journal of Economics, 37(2), pp. 379-402.
Garbellini N. (2014), “International division of labour and countries’ competitiveness: the case of Italy and Germany”, MPRA Working Paper, no. 56542, Munich: Munich Personal RePec Archive. Available online.
Garbellini N. and Wirkierman A.L. (2014), “Productivity accounting in vertically (Hyper-) integrated terms: Bridging the gap between theory and empirics”, Metroeconomica, 65(1), pp. 154-190.
Garbellini N. and Wirkierman A.L. (2010), “Changes in the productivity of labour and vertically integrated sectors—an empirical study for Italy”, MPRA Working Paper, no. 25726, Munich: Munich Personal RePec Archive. Available online.
Gossling W. (1972), Productivity trends in a sectoral macro-economic model, London: Input-Output Publishing.
Gossling W. and Dovring F. (1966), “Labor Productivity Measurement: The Use of Subsystems in the Interindustry Approach, and Some Approximating Alternatives”, Journal of Farm Economics, 48(2), pp. 369-377.
Gowdy J. M. (1992), “Labour productivity and energy intensity in Australia 1974–87: An input-output analysis”, Energy Economics, 14(1), pp. 43-48.
Grodzicki M.J. and Skrzypek J. (2020), “Cost-competitiveness and structural change in value chains–vertically-integrated analysis of the European automotive sector”, Structural Change and Economic Dynamics, 55, pp. 276-287. Available online.
Gupta S. and Steedman I. (1971), “An Input-Output Study of Labour Productivity in the British Economy”, Oxford Bulletin of Economics and Statistics, 33(1), pp. 21-34.
Han X. (1995), “Structural change and labor requirement of the Japanese economy”, Economic Systems Research, 7(1), pp. 47-66.
Hummels D., Ishii J. and Yi K.M. (2001), “The nature and growth of vertical specialization in world trade”, Journal of international Economics, 54(1), pp. 75-96.
Lind D. (2020), “A vertically integrated perspective on nordic manufacturing productivity”, International Productivity Monitor, (39), pp. 53-73.
Madariaga R. (2018), “Factors driving sectoral and occupational employment changes during the Spanish boom (1995–2005)”, Economic Systems Research, 30(3), pp. 400-421.
Mundt P., Savin I., Cantner U., Inoue H. and Vannuccini S. (2023), “Peer effects in productivity and differential growth: a global value-chain perspective”, Industrial and Corporate Change, 32(6), pp. 1267-1285.
Ochoa E. M. (1986), “An input-output study of labor productivity in the US economy, 1947–72”, Journal of Post Keynesian Economics, 9(1), pp. 111-137.
Panethimitakis A. J. (1993), “Direct versus Total Labour Productivity in Greek Manufacturing: 1958–1980”, Economic Systems Research, 5(1), pp. 79-94.
Pasinetti L.L. (2000), “Critique of the neoclassical theory of growth and distribution”, PSL Quarterly Review, 53(215), pp. 383-431.
Pasinetti L.L. (1993), Structural Economic Dynamics, Cambridge (UK): Cambridge University Press.
Pasinetti L.L. (1990), “Sraffa’s circular process and the concept of vertical integration”, In K. Bharadwaj e B. Schefold (eds), Essays on Piero Sraffa: Critical Perspectives on the Revival of Classical Theory (pp. 229-238), London: Unwin Hyman Ltd.
Pasinetti L.L. (1988), “Growing subsystems, vertically hyper-integrated sectors and the labour theory of value”, Cambridge Journal of Economics, 12(1), pp. 125-134.
Pasinetti L.L. (1981), Structural Change and Economic Growth. A Theoretical Essay on the Dynamics of the Wealth of Nations, Cambridge University Press, Cambridge.
Pasinetti L.L. (1977), Lectures on the Theory of Production, New York: Columbia University Press.
Pasinetti L.L. (1973), “The notion of vertical integration in economic analysis”, Metroeconomica, 25(1), pp. 1-29.
Portella-Carbó F. (2016), “Effects of international trade on domestic employment: an application of a global multiregional input–output supermultiplier model (1995–2011)”, Economic Systems Research, 28(1), pp. 95-117.
Rampa G. (1981), “The concept and measurement of productivity in an input-output framework”, Faculty of Economics and Politics Research Papers , no.18, Cambridge (UK): University of Cambridge.
Rampa L. and Rampa G. (1982), “Sul mutamento tecnologico dell’economia italiana, 1959-1975: un’analisi input-output”, Ricerche economiche, (4), pp. 303-341.
Riedel J. (1976), “Intermediate products and the theory of international trade: A generalization of the pure intermediate good case”, The American Economic Review, 66(3), pp. 441-447.
Ruiz A.L. and Wolff E.N. (1996), “Productivity Growth, Import Leakage and Employment Growth in Puerto Rico, 1967–87”, Economic Systems Research, 8(4), pp. 391-414.
Savin I. and Mundt P. (2022), “Drivers of productivity change in global value chains: Reallocation vs. innovation”, Economics Letters, 220, art. 110878.
Shaikh A. (1974), “Laws of Production and Laws of Algebra: The Humbug Production Function”, The Review of Economics and Statistics, 56(1), pp. 115-120.
Solow R.M. (1957), “Technical change and the aggregate production function”, The Review of Economics and Statistics, 39(3), pp. 312-320.
Sraffa P. (1960), Production of Commodities by Means of Commodities, Cambridge (UK): Cambridge University Press.
Steedman I. (1999), “Production of Commodities by Means of Commodities and the Open Economy”, Metroeconomica, 50(3), pp. 260-276.
Wirkierman A.L. (2022), “Productivity homogenisation trends of six advanced industrial economies: A vertically hyper-integrated approach”, Structural Change and Economic Dynamics, 61, pp. 495-511.
Wirkierman A.L. (2023), “Structural economic dynamics in actual industrial economies”, Structural Change and Economic Dynamics, 64, pp. 245-262.
Wolff E.N. (2006), “The growth of information workers in the US economy, 1950–2000: the role of technological change, computerization, and structural change”, Economic Systems Research, 18(3), pp. 221-255.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Gabriel Brondino, Facund Fora Alcalde, Miguel Ángel Casaú Guirao
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
