Factors affecting labor productivity in the industrial sector in Algeria Standard study during the period (1980-2020)

Abstract

The aim of this study is to highlight the factors affecting labor productivity in the industrial sector in Algeria during the period from 1980 to 2016 using johansen counteraction and error correction model. Thus, the study found the following main results: According to the Johansen test, all the variables of the study, namely, oil prices and wage rates, have a positive relationship with labor productivity in the industrial sector in Algeria in the long term, except the inflation index, which has a negative relation. Leads to excessive demand leading to higher prices. We conclude that the relationship between wage rate and productivity is determined only if the increase in productivity is higher than the rate of increase in wages to create surplus that allows the development and reduce the unemployment rate. In the short run, based on the VECM test, we conclude that the wage rate and inflation rate did not contribute to the explanation of labor productivity in Algeria during the study period, which maintained the same positive correlation.