Theory and Empirics
Edited by Neri Salvadori, Pasquale Commendatore and Massimo Tamberi
Chapter 11: Labour Productivity and Technological Capability: An Econometric Analysis on the Italian Regions
Giulio Guarini 11.1. INTRODUCTION It is widely argued in the economics literature that high technological capability is essential for economic development because it generates innovations by accelerating technological progress. Moreover, in the global economy technical knowledge is a means to compete in the global market. Using econometric analysis this chapter aims to verify the effect of technological capability on labour productivity in the Italian regions. For this purpose, I construct a new version of the labour productivity function of Sylos Labini, where the growth rate of productivity depends on three effects: the Smith effect, represented by the growth rate of market size that is stimulated by labour division and learning by doing; the Ricardo effect, represented by investment in new machinery stimulated by the growth rate of the relative labour cost (defined as the difference between wages and price of machinery); and the knowledge effect, introduced in this chapter, represented by variables linked to technological capability. I estimate regressions for manufacturing and consider several other variables linked to knowledge, both individually and all together. Moreover, through a dummy analysis I investigate whether the dynamics of knowledge is significantly conditioned by territorial factors. The chapter is structured as follows. First, I present a state-of-the-art review of the literature on this topic. Subsequently, I explain the econometric model estimated with the main information of econometric analysis. Finally, I illustrate the results of the econometric analysis. Empirical evidence suggests that in the Italian regions, especially in the centre-northern regions, improvements in technological capability...
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