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16th International Input-Output Conference
Istanbul, Turkey, 2-6 July 2007



          GENERATION
      & BENEFIT SPILLOV...
Productivity:
relationship between output & labor



         x jt   For the entire economy
π jt =          as well as for...
Employment in Thousands    Gross Output in Million TL in 1973 values
                                                     ...
100   Gross Output in Millions per Empolyment in Thousands

                                                        77.9
7...
0.0
                                                                     0.3
                                             ...
Relations
Output (x) is produced because:


                                ([           ])
     x = [I − A ]
            ...
Important issues
 Output production & allocation
 Employment generation
 Productivity (produce more with less)
 Payments t...
Underlined principles
 Whenever there is a market to sell
 PRODUCTION increases


 Whenever productivity increases
 there ...
Net result

 Is there any growth?
 Do people have work?
 Do they get ‘sufficient’ income
General Sectoral Outlook
of the Turkish Economy
 Output & Employment relations

 Sales

    of final products & industrial...
Mahalanobis Dist. of Gross Output & Employment
       Output & Employment
5.00


4.00


3.00


2.00


1.00


0.00
       1...
Sectors with significant
Employment & Output


Agriculture          (1)

Iron & Steel        (11)

Construction        (18...
Sectors where output
      exceeds employment

Food & Beverages         (3)

Oil Refining             (8)

Transportation ...
Sectors where employment
         exceeds output

Personnel Services   (22)

Trade                (19)
Value of Final Products & - Sales
             Mahalanobis Dist. of Transaction Rows
5.00
           Industrial Sales
4.00...
dominant sales
     to industrial sectors
Iron & Steel      (11)
Services          (22)
Transportation    (20)
Banking    ...
dominant sales
        for a final use

Construction       (18)

Food & Beverages    (3)

Trade              (19)

Public ...
Value addedof Transaction Columns - Purchases
            Mahalanobis Dist. payments &
5.00
           interindustry purch...
dominant payments
        to industrial sectors

Food & Beverages        (3)
Construction           (18)
Textiles         ...
dominant payments
         to primary inputs

Public Services    (23)

Services           (22)

Agriculture         (1)

O...
Analytical Mechanism
                      Sales of final products

                      Sales to industrial sectors

   ...
Analytical Mechanism (cont)

    x = [I − A ] y = Iy + Ay + A 2 y + A 3 y + L + A n y
               −1



           [   ...
(          )(            )(                                   )
       −1            −1            −1               −1
π= ...
Observation based on the
    Productivity Decomposit
Productivity Decomposition
 0.10
                                    ...
Most sales
                     Oil Refining
        Allocation                        Production
                        ...
Mahalanobis between
          Relationship Distance
    productivity & productivity change
5
                             ...
Labor Reduction & Output Expansion
       of productivity change
             ⎧ ln (Lt ) − ln (Lt+ T )⎫ ⎧ ln(x t+ T ) − ln...
Output (↑) / Labor (↓)
           Mahalanobis Distance

   4
                                                           • ...
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Generation & Benefit Spilover Of Labor Productivity In Turkey Presentation

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This is a presentation of a paper with prof. Σωτήριος Θεοδωρόπουλος

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Generation & Benefit Spilover Of Labor Productivity In Turkey Presentation

  1. 1. 16th International Input-Output Conference Istanbul, Turkey, 2-6 July 2007 GENERATION & BENEFIT SPILLOVER OF LABOR PRODUCTIVITY IN TURKEY by NIKOLAOS ADAMOU & SOTIRIOS THEODOROPOULOS
  2. 2. Productivity: relationship between output & labor x jt For the entire economy π jt = as well as for each sector Ljt at any given point in time
  3. 3. Employment in Thousands Gross Output in Million TL in 1973 values 1,600,000 25,000 1,400,000 20,000 1,200,000 1,000,000 15,000 800,000 10,000 600,000 400,000 5,000 200,000 0 0 1973 1979 1985 1990
  4. 4. 100 Gross Output in Millions per Empolyment in Thousands 77.9 75 56.4 47.1 50 33.0 25 0 1973 1979 1985 1990
  5. 5. 0.0 0.3 0.5 0.8 1.0 1 Agriculture 2 Mining 3 Food-Bever. 4 Textiles 5 Wood-Furn. 6 Paper-Print. 7 Chemicals 8 Oil_Refining Rubber-Plast. Glass-Cement Iron-Steel Metal_Prdcts Machinery Electrical_M. Transport_V. Sectoral output per unit of labor Other_Manfc. Utilities Construction Trade Transport_S. Banking Pers_Serv&H. 1990 1985 1979 1973 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Public_Serv.
  6. 6. Relations Output (x) is produced because: ([ ]) x = [I − A ] ~ −1 y = h I−A T T ~ • There is final demand y & industrial demand A T • Payments & purchases A are made h
  7. 7. Important issues Output production & allocation Employment generation Productivity (produce more with less) Payments to factors of production Wages & Salaries Profits Rent & other
  8. 8. Underlined principles Whenever there is a market to sell PRODUCTION increases Whenever productivity increases there is not necessarily increase in employment
  9. 9. Net result Is there any growth? Do people have work? Do they get ‘sufficient’ income
  10. 10. General Sectoral Outlook of the Turkish Economy Output & Employment relations Sales of final products & industrial sales Payments for value added & industrial purchases
  11. 11. Mahalanobis Dist. of Gross Output & Employment Output & Employment 5.00 4.00 3.00 2.00 1.00 0.00 12 34 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 QE
  12. 12. Sectors with significant Employment & Output Agriculture (1) Iron & Steel (11) Construction (18) Public Service (23)
  13. 13. Sectors where output exceeds employment Food & Beverages (3) Oil Refining (8) Transportation Services (20)
  14. 14. Sectors where employment exceeds output Personnel Services (22) Trade (19)
  15. 15. Value of Final Products & - Sales Mahalanobis Dist. of Transaction Rows 5.00 Industrial Sales 4.00 3.00 2.00 1.00 0.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Final Use Interindustry Trans.
  16. 16. dominant sales to industrial sectors Iron & Steel (11) Services (22) Transportation (20) Banking (21) Chemicals (7) Oil Refining (8)
  17. 17. dominant sales for a final use Construction (18) Food & Beverages (3) Trade (19) Public Services (23)
  18. 18. Value addedof Transaction Columns - Purchases Mahalanobis Dist. payments & 5.00 interindustry purchases 4.00 3.00 2.00 1.00 0.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Value Added Interindustry Trans.
  19. 19. dominant payments to industrial sectors Food & Beverages (3) Construction (18) Textiles (4) Electrical Machinery (14) Iron & Steel (11)
  20. 20. dominant payments to primary inputs Public Services (23) Services (22) Agriculture (1) Oil Refining (8)
  21. 21. Analytical Mechanism Sales of final products Sales to industrial sectors Payments due to purchases from industrial sectors Wages & Payments for value added Salaries Profits Wages & Salaries Employment
  22. 22. Analytical Mechanism (cont) x = [I − A ] y = Iy + Ay + A 2 y + A 3 y + L + A n y −1 [ ] ~ ~ T~2 T ~3 T~n −1 x =h I − A =h I + h A + h A + h A +L+ h A T T T T Utilize the known decomposition of output generation of similar matrices
  23. 23. ( )( )( ) −1 −1 −1 −1 π= L A 2 y+L L An y Iy + L Ay + L Analytical Mechanism (cont) ( Iy)+ ( L Ay)+ ( L ) −1 −1 −1 −1 π= L 2 n A y+L L Ay π = (h I L )+ (h A L )+ (h A ) ~ ~ ~n −1 −1 −1 −1 + Lh A L T T T 2 T L Apply the decomposition to the relationship of output to employment
  24. 24. Observation based on the Productivity Decomposit Productivity Decomposition 0.10 As productivity 0.08 increases, 0.06 0.04 its direct & indirect 0.02 components 0.00 1973 1979 1985 1990 become more significant InducedDirect Indirec
  25. 25. Most sales Oil Refining Allocation Production are direct '90 '85 & indirect '79 to '73 industrial 1.5 0.5 0.5 1.5 Final Use Direct Req. Indirect Req. sectors Value Added Direct All. Indirect All. Most of the payments are to primary inputs
  26. 26. Mahalanobis between Relationship Distance productivity & productivity change 5 ⎛ ⎜ xt +T Lt+ T ⎞ ⎟ ln Oil Refining ⎝ xt Lt ⎠ Λ t,t+ T = 4 T 8 16 Iron & Steel 11 9 3 Other 14 Rubber & Plastics Electrical Machinery Manufacturing Productivity change 2 5 17 1 Wood & Furniture Utilities 0 0 1 2 3 4 5 Total Productivity
  27. 27. Labor Reduction & Output Expansion of productivity change ⎧ ln (Lt ) − ln (Lt+ T )⎫ ⎧ ln(x t+ T ) − ln (xt )⎫ Λ t,t + T =⎨ ⎬+ ⎨ ⎬ ⎩ ⎭⎩ ⎭ T T labor reduction output expansion
  28. 28. Output (↑) / Labor (↓) Mahalanobis Distance 4 • Other Man. (16) 14 16 • Electrical 8 3 Machinery (14) • Oil Refining (8) 9 11 2 1 22 1 0 0 1 2 3 4 Employment Reduction Plastic & Rubber (9) and Oil Refining (8)

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