Quantity Or Quality: The Impact Of Labor-saving Innovation On US And Japanese Growth Rates, 1960-2004

This paper deals with both theoretical and empirical analyses of the post-war period (1960 - 2004) for the United States and Japan. The authors investigated three factors contributing to growth: the growth rates of capital, labor, and labor-saving innovation. It is shown that in Japan, the growth rate of the labor force has been much less important than its quality improvement - i.e., labor-saving technical change - while in the US, the growth rate of labor and population has contributed more than their quality improvement. The policy implication here is Japan's declining population can be compensated for by additional quality improvement of the existing labor force.