Four Worlds of Productivity Growth: A Comparative Analysis of Human Capital Investment Policy and Productivity Growth Outcomes

2016 ◽  
Author(s):  
Takayuki Sakamoto
Keyword(s):  
Human Capital ◽  
Comparative Analysis ◽  
Productivity Growth ◽  
Capital Investment ◽  
Human Capital Investment ◽  
Investment Policy ◽  
Growth Outcomes

Four worlds of productivity growth: A comparative analysis of human capital investment policy and productivity growth outcomes

2017 ◽  
Vol 39 (4) ◽  
pp. 531-550 ◽  
Author(s):  
Takayuki Sakamoto
Keyword(s):  
Human Capital ◽  
Labor Productivity ◽  
Productivity Growth ◽  
Capital Investment ◽  
Human Capital Investment ◽  
Physical Capital ◽  
European Countries ◽  
Capital Investments ◽  
Growth Strategies ◽  
Labor Productivity Growth

Labor productivity is an important determinant of the wealth of national economies and standards of living, as its growth explains half of per capita GDP growth. I show that there are four worlds of productivity growth among industrialized countries, by decomposing labor productivity growth into multifactor productivity (MFP) growth and capital deepening. The four worlds that emerge from the analysis are: (1) human capital investment- and MFP growth-dominant Nordic countries; (2) physical capital investment- and labor productivity growth-dominant liberal countries; (3) continental European countries whose moderately high human capital investments create decently high MFP growth, but whose low physical capital investments push down their labor productivity; and (4) South European countries with both the lowest human capital investment and lowest productivity growth. The four worlds are a result partly of the countries’ partisan politics, economic growth strategies, and human capital formation policies – different policies add differently to the components of labor productivity.

Sign in / Sign up

Export Citation Format

Share Document