LABOR PRODUCTIVITY SLOWDOWN AND TECHNICAL PROGRESS IN THE NETHERLANDS

A step-by-step vintage modeling of productive capacity and labor demand, and a dynamic simulation over the period 1973-1986, indicate that the labor productivity slowdown in the Netherlands can for a large part be ascribed to various aspects of wage policy. Therefore it is not necessarily true that a decline of technical progress growth has been at the root of this labor productivity slowdown. An impulse analysis shows that these conclusions depend on a number of crucial assumptions and parameter values of the vintage model. The influence of real wage costs on scrapping of old capital goods appears to be of major importance in this respect. The same holds for the question whether technical progress is endogenous. © 1991.