Sources of Australian Labour Productivity Change 1950–1994

This study examines sources of Australian labour productivity change from 1950 to 1994. Time-series data are used to estimate a model capturing the interaction between labour productivity, fixed capital, human capital, telecommunications, trade openness and international competitiveness. Attention is given to the time-series properties of these data. ADF tests for unit roots are employed, and the sensitivity of the tests to non-linear transformations and structural breaks are considered. Estimates suggest that policies that promote investment, economic integration and international competitiveness will improve short-run labour productivity. In the long run, fixed capital accumulation is the dominant source of productivity improvement.