scholarly journals Kaldor-Verdoorn's Law and Increasing Returns to Scale: A Comparison Across Developed Countries

2012 ◽  
Author(s):  
Emanuele Millemaci ◽  
Ferdinando Ofria
Keyword(s):  
Returns To Scale ◽  
Developed Countries ◽  
Increasing Returns ◽  
Increasing Returns To Scale ◽  
Verdoorn's Law

Kaldor-Verdoorn's law and increasing returns to scale

2014 ◽  
Vol 41 (1) ◽  
pp. 140-162 ◽  
Author(s):  
Emanuele Millemaci ◽  
Ferdinando Ofria
Keyword(s):  
Productivity Growth ◽  
Economies Of Scale ◽  
Returns To Scale ◽  
Labor Cost ◽  
Increasing Returns ◽  
Content Type ◽  
Increasing Returns To Scale ◽  
Capital Growth ◽  
Cost Growth ◽  
Verdoorn's Law

Purpose – The aim of this study is to investigate the validity of the Kaldor-Verdoorn's law in explaining the long-run determinants of the labor productivity growth for the manufacturing sector of some developed economies (Western European Countries, Australia, Canada, Japan and the USA). Design/methodology/approach – The authors consider the period 1973-2006 using data provided by the European Commission – Economics and Financial Affairs. The method is instrumental variable. The robustness of estimates is checked by means of the Chow and the CUSUM and CUSUMQ tests. The authors consider the traditional specification of the dynamic Verdoorn law and the one which also includes investment to output ratio (I/Y), as a proxy of the capital growth rate, and the average labor cost growth, as a proxy of supply factors. Findings – The findings suggest that the law is valid for the manufacturing as countries show increasing returns to scale. Capital growth and labor cost growth do not appear important in explaining productivity growth. The estimated Verdoorn coefficients are found to be substantially stable throughout the period. Originality/value – The authors consider the most recent years, which has been characterized by a constant decline in the average GDP growth rates; a productivity growth decline; the long-term reduction in the manufacturing share of total employment. The authors examine the importance of alternative hypotheses such as those related to the existence of supply constraints. The authors check the stability of the KVL throughout the period under the consideration and across countries. The authors evaluate whether, in the case of the developed countries, economies of scale are significant.

Differences in increasing returns between technological sectors

2016 ◽  
Vol 43 (5) ◽  
pp. 863-878 ◽  
Author(s):  
João P. Romero ◽  
John S.L. McCombie
Keyword(s):  
Returns To Scale ◽  
Manufacturing Industries ◽  
Increasing Returns ◽  
Estimation Methods ◽  
High Tech ◽  
System Gmm ◽  
Content Type ◽  
Increasing Returns To Scale ◽  
New Evidence ◽  
Verdoorn's Law

Purpose The purpose of this paper is twofold: to investigate the existence of different degrees of returns to scale in low-tech and high-tech manufacturing industries; and to examine whether the degrees of returns to scale change through time. Design/methodology/approach The empirical investigation implemented in the paper uses data from the EU KLEMS Database, covering a sample of 12 manufacturing industries in 11 OECD countries over the period 1976-2006. The investigation employed two different estimation methods: instrumental variables and system GMM. The robustness of the results was assessed by employing two different specifications of Kaldor-Verdoorn’s Law, by using lags and five-year averages to smooth business-cycle fluctuations, and by dividing the sample into two time periods. Findings The results reported in the paper provide strong evidence in support of the hypothesis of substantial increasing returns to scale in manufacturing. The investigation suggests that high-tech manufacturing industries exhibit larger degrees of returns to scale than low-tech manufacturing industries. Finally, the analysis revealed also that the magnitude of the returns to scale in manufacturing have increased in the last decades, driven by increases in the magnitude of returns to scale observed in high-tech industries. Originality/value No previous work has assessed the hypothesis that increasing returns to scale vary according to the technological content of industries. Moreover, no previous work has used system GMM or data from EU KLEMS to test Kaldor-Verdoorn’s Law. Most importantly, the findings of the paper present new evidence on the degree of returns to scale in high-tech and low-tech manufacturing industries.

scholarly journals Returns to Scale for EU Regions – evidence from the spatial panel model

2017 ◽  
Vol 3 (329) ◽  
Author(s):  
Alicja Anna Olejnik
Keyword(s):  
Fixed Effects ◽  
Regional Growth ◽  
Returns To Scale ◽  
Increasing Returns ◽  
Increasing Returns To Scale ◽  
Spatial Panel ◽  
Panel Model ◽  
Eu Regions ◽  
Spatial Panel Model ◽  
The Eu

Recent findings emphasise the importance of localised returns to scale for the regional growth as well as for the agglomeration processes. However, it is still not well established whether returns to scale are constant or increasing, and to what extent. Therefore, in this study we apply specification which describes the productivity growth with the growth of output through the Verdoorn’s law. This study aims to provide some new estimates of the degree of returns to scale for EU regions. Our findings show that the hypothesis of increasing returns to scale is still valid in today’s EU economy. To test the hypothesis, we have employed the Multidimensional Spatial Panel Durbin Model with Spatial Fixed Effects. The research is conducted for 261 regions of the EU 28. The paper concludes that increasing returns to scale in EU regions are substantial.

Network Effects

2010 ◽  
pp. 1007-1013
Author(s):  
Erik den Hartigh
Keyword(s):  
Network Effects ◽  
Returns To Scale ◽  
Increasing Returns ◽  
Increasing Returns To Scale ◽  
The Subject

From the 1980s, network effects attracted a lot of interest in economics and management sciences. This was mainly due to the work of Arthur (e.g., 1988, 1989, 1990). While the subject of increasing returns to scale in companies had a long tradition in economics, network effects (i.e., increasing returns in markets) had hardly been addressed.

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