The Effect of Financial Development on Labor Productivity: Co-integration Application in Dynamic Panel Data

Document Type : پژوهشی

Authors

naser sayfolahi

hatef hazeri

mohaghegh

https://doi.org/10.22067/pm.v24i13.57736

Abstract

Labor productivity issue in economy has an increasing importance in effective stability that is affected by various financial and non-financial factors. In this study, after using the partial adjustment model to address the endogeneity of the labor productivity, the direct effect of financial development on labor productivity has been analyzed by using Dynamic Panel Data (DPD) techniques based on Generalized Method of Moments (GMM) in the Middle East and North Africa (MENA) countries from 2000 to 2014. The empirical results of this study confirmed that, domestic credit to private sector as a share of GDP positively effects on labor productivity in the first place. Secondly, the higher levels of education and health have a higher level of labor productivity. In addition, increasing trade openness through knowledge and technology transfer enhances labor productivity. Finally, the additional worth findings confirmed the transmission of GDP per person employed performance to the next period and labor productivity dynamics.

Keywords

Labor Productivity

Financial development

Dynamic Panel

Generalized Method of Moments

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