Determinants of Labor Productivity in Northeast Thailand
Determinants of Labor Productivity in Northeast Thailand

Summary/Abstract: This study aims to analyze the determinants of labor productivity in Northeast Thailand from 1981–2015, using multiple regression with log specification. Labor productivity is measured using two approaches: average product of labor (APL) and marginal product of labor (MPL). APL is directly calculated from secondary data while the MPL can also be derived from secondary data but it is more complicated. To circumvent this problem, the MPL is calculated from the Cobb-Douglas production function. The data analysis shows that labor productivity is highly dependent on the capital-labor ratio, government investment in education and health, the value of the output ratio of agriculture to industry, and the value of output ratio of services to industry. The results of both approaches are in accordance with the important determinants of labor productivity. The government and private sectors should focus on these factors to improve labor productivity in the Northeast which cause labor to gain the opportunity of receiving higher wages and better living standards.

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