Productivity Growth in Australian Manufacturing: A Vintage Capital Model

Uses a model of technical change embodied in capital equipment to analyse average labour productivity growth. Determinants of productivity growth identified in this analysis are: (1) the rate of labour-saving technical change; (2) the differential in the rates of change of wages and the rental price of capital; and (3) the rate of growth of industry productive capacity. Finds evidence that each of the identified factors has a positive and statistically significant relationship to average labour productivity growth in a cross-section of Australian manufacturing industries.