Labor Productivity

The present paper attempts to estimate the relationship between labor productivity and health, technological progress and education, using panel data observing 57-nation Orgamization of Islamic Coopeation, OIC over the period of 1995-2009. A two-step procedure was used with the first involving an estimate of labor productivity based on observations in the OPEC, GCC and ECO member countries and also African nations within the Islamic countries. The second step involved an estimate of the effect on labor productivity of health, technological progress and education. Our findings indicate that labor productivities in Islamic countries with some exceptions on an average are above 3 with the highest of 12 belonging to Azerbaijan. Exceptions are Somalia and Gabon with negative productivities and Brunei and Cameroun with productivities around one. The only variable influencing labor productivity in the Islamic countries is health with technology and education having no meaningful influence.

One of the most critical indicators of one-factor productivity is the labor productivity index. This index has various and broad applications in the dimensions of economic policy. On the one hand, the labor productivity index determines per capita income levels and living standards. On the other hand, efficiency combined with other factors such as capital stock can make technical changes. The issue of how monetary and exchange rate variables affect labor productivity has been of particular importance in recent international studies. Due to the importance of the issue, this study investigates the asymmetric effect of exchange rate and bank facility rates on labor productivity in Iran in 1971-2018. The results of model estimation by self-explanatory method with nonlinear autoregressive distributed lag (NARDL) indicate that in the short and long run, the effect of free-market exchange rates and bank lending rates on labor productivity is asymmetric so that reductions in exchange rates have a significant direct effect on labor productivity and increases are not significant. In addition, increases in bank lending rates have a direct effect and reductions have an adverse effect on labor productivity.