Equilibrium Distribution of Labor Productivity

Author Name AOYAMA Hideaki (Faculty Fellow, RIETI) / IYETOMI Hiroshi (University of Tokyo) / YOSHIKAWA Hiroshi (Faculty Fellow, RIETI)
Creation Date/NO. June 2012 12-E-041
Research Project Dynamics, Energy and Environment, and Growth of Small- and Medium-sized Enterprises
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We construct a theoretical model for equilibrium distribution of workers across sectors with different labor productivity, assuming that a sector can accommodate a limited number of workers which depends only on its productivity. A general formula for such distribution of productivity is obtained, using the detail-balance condition necessary for equilibrium in the Ehrenfest-Brillouin model.

We also carry out an empirical analysis on the average number of workers in given productivity sectors on the basis of an exhaustive dataset in Japan. The theoretical formula succeeds in explaining the two distinctive observational facts in a unified way, that is, a Boltzmann distribution with negative temperature on the low-to-medium productivity side and a decreasing part in a power-law form on the high productivity side.

Published: Hideaki Aoyama, Hiroshi Iyetomi, Hiroshi Yoshikawa, 2015. "Equilibrium distribution of labor productivity: a theoretical model," Journal of Economic Interaction and Coordination, Vol. 10(1), pp. 57-66.