Technology, Productivity Growth, and Productivity-Employment Trade-offs

By : Arup Mitra

Page No: 103-111

Abstract
The paper tries to reflect on the concept of total factor productivity growth and its determinants, including technology, infrastructure and trade openness. The inverse relationship between labour productivity growth and employment growth becomes distinct particularly when one of the two grows rapidly. Policy planners would advocate for countries with low wages to have higher productivity growth so that the benefits can be transferred partly to the workers. On the other hand, sluggish productivity growth along with slow employment growth is not a desirable outcome. Only when value added growth is stepped up by total factor productivity growth (i.e., TFP-driven growth), employment growth can still be faster, particularly if the technology is labour intensive in nature and/or the “scale effect” is substantial.

Author :
Arup Mitra
Professor, Institute of Economic Growth, Delhi University Enclave, Delhi-110007.
 

DOI: https://doi.org/10.32381/PROD.2021.62.02.1