where A - the constant term (shift factor); LPGDP - natural log of per-capita output (GD[P.sub.t] / [L.sub.t]) (in RM thousand per people); LCPW - natural log of
capital-labour ratio ([P.sub.t] / [L.sub.t]) (in USD thousand per people); LINV - natural log of EPF investment funds (in RM billion); LCONR - natural log of EPF contribution rates (in percentage); LURB - natural log of urbanization (in million people); LFERT - natural log of fertility rate (in number of births per woman); LDEPR - natural log of dependency ratio (in percentage retired-to-working groups); LOAGES - natural log of old ages group (in percentage of total population).
He identifies weak international connections, the geographical segregation of domestic markets and their small size, and a low
capital-labour ratio as factors that have contributed to weak productivity growth.
(1961), in a linearly homogeneous production function marginal productivity of labour is an increasing function of
capital-labour ratio. Usually some other variables like human capital, innovation, trade openness, research and development are included in the model along with
capital-labour ratio to analyse determinants of labour productivity [see for example, Velucchi and Viviani (2011); Han, Kauffman, and Nault (2011); Hussain (2009); Apergis, et al.
The equilibrium gross wage composite becomes slightly higher after the lower migration shock, due to the reduction in overall labour supply, which leads to a higher
capital-labour ratio. But this effect does not persist for long; as the
capital-labour ratio adjusts back to its equilibrium level, the positive gross wage differential disappears by the end of the simulation period.
A conservative assessment by Louis Kuijs, working with the World Bank, shows that, from 1978 to 1994, China's GDP grew by an average of 9.9% annually, labour productivity increased by 6.4%, TFP rose by 3% and the
capital-labour ratio increased by 2.9%.
The
capital-labour ratio at time t is denoted by k(t) and serves as the state variable of the model.
In the present study,
capital-labour ratio was taken as a measure of capital intensity.
Consistent with trade theories, firms with lower
capital-labour ratio, higher return on sales, and larger firm size are found to have higher export propensity.
Because sales growth is a reflection of shortterm firm growth, and asset growth is a reflection of long-term firm growth, productivity and capacity utilization are, to a large extent, influenced by investments that increase growth and by the
capital-labour ratio, which indicates that technology tends to be employed in fast-growing firms.
The nature of input technical bias can be assessed comparing the value of IBTCi,t+1 to the evolution of the
capital-labour ratio (FARE et al., 1996):
Increasing the amount of capital equipment relative to labour used in production (
capital-labour ratio) creates a capital deepening effect.