ABSTRACT
In November 1966, Nicholas Kaldor (b. 1908; d. 1986) delivered an inaugural lecture on the occasion of the creation of a personal chair for him by the University of Cambridge. The lecture – on the causes of the economic decline of the United Kingdom – attracted wide attention from the press and academia. Kaldor’s ([1966] 1989: 288–289) main piece of analytical argument was the linear positive relationship that resulted from regressing the rate of growth of labour productivity on the rate of growth of manufacturing output for several industrialized countries in the period from 1953–54 to 1963–64. The empirical result was dubbed the ‘Verdoorn Law’ by Kaldor, in reference to a pioneering estimation of that same relationship by the Dutch economist Petrus Johannes Verdoorn (b. 1911; d. 1982) for a similar set of countries and some industrial sectors in France and Italy between mid-nineteenth century and the 1930s. Verdoorn’s results were originally published in 1949 in the Italian journal L’Industria. Although occasionally discussed in the literature of the 1950s and early 1960s as an important breakthrough (see Clark 1957, Ch. 4; Arrow 1962: 156), it was only after Kaldor’s inaugural lecture that Verdoorn’s 1949 econometric exercise would become well known and widely cited by growth economists, especially in the Keynesian–Kaldorian camp. Therefore, the positive effect of long-run manufacturing output growth on the evolution of labour productivity in the industrial sector is often called the ‘Kaldor–Verdoorn Law’.
