Factor analysis of labor productivity in sectorial breakdown: the case of Azerbaijan

Abstract

The main research question is: “Which factors affecting labor productivity determine the positive dynamics of Azerbaijan’s economic development?” This article examines the theoretical foundations and analyzes the influence of factors such as the average monthly wage across the economy, the share of employment in industry, the share of employment in agriculture, forestry, and fisheries, the share of employment in construction, and the average duration of schooling on labor productivity.

The purpose of this article is to identify the relationship between the aforementioned factors and labor productivity using economic-mathematical modeling. An analysis of labor productivity dynamics from 2005 to 2020 was conducted in a sectoral breakdown of Azerbaijan’s economy. Regression modeling was performed to determine the impact of the selected factors on labor productivity.

By systematizing and analyzing the approaches of contemporary scholars, this study identified similarities between classical, neoclassical, Keynesian, and monetarist approaches and the views of modern researchers examining the positive and negative effects of various factors on labor productivity in the context of economic development. The literature review highlighted a wide range of specific determinants of labor productivity and identified the factors considered significant in the specific economic models under study.

The study employed the method of scientific deduction to identify key factors influencing labor productivity dynamics, statistical analysis of sectoral data, and economic-mathematical modeling using regression, where the dependent variable (y) is labor productivity dynamics during 2005–2019, and the independent (influencing) variables are:

·          x1: average monthly wage across the economy

·          x2: share of employment in industry

·          x3: share of employment in agriculture, forestry, and fisheries

·          x4: share of employment in construction

·          x5: average duration of schooling

In addition to the above research methods, graphical analysis, comparative analysis, classification, and a systematic approach were applied to examine the sectoral composition of labor productivity in Azerbaijan’s economy.

This study concludes that labor productivity is indeed influenced and altered by the selected factors.