Why a high level of labor force growth is correlated, Microeconomics

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Why a high level of labor force growth is correlated

A high level of labor force growth is correlated--even though less powerfully--with a low level of output per worker. The average nation with a labor force growth rate of more than 3 percent per year has an output per worker level less than 20 percent of the U.S. Average variable with a lab or force growth rate of less than 1% has an output per worker level greater than 60 percent of the U.S. level.

Together these determinants of steady-state capital-output ratio can statistically account for up to half of variation in national economies' levels of productivity per worker in the world today.

Differences in the efficiency of labor are as significant as differences in steady-state capital-output ratios. Differences in efficiency of labor arise from differential ability of workers to handle and utilities modern technologies.

Efficiency of labor is high in those places where educational levels are high-sothat workers can use modern technologies they are exposed to-and where economic contact with industrial core is high-sothat managers and workers are exposed to the modern technologies invented in world's R&D laboratories.

Schooling is the variable which has the strongest correlation with output per worker. Nations that have an average of 4-6 years of schooling have output per worker levels that average 20% of the United States' Countries with an average level of schooling of greater than 10 years have output per worker levels of 65% of the U.S. level.

 


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