Thursday, October 2, 2014

Kaldor-Verdoorn's Law for Latin America


The Kaldor-Verdoorn’s Law (KVL) suggests that the rate of growth of labor productivity is determined by the expansion of demand. In other words, KVL suggests that there is a strong correlation between the growth of labor productivity and the rate of growth of economic activity.

The graph shows KVL for 7 Latin American Economies between 1950 and 2006. For similar analysis for the US see this paper.

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