The vintage model of capital accumulation predicts that technical progress depends on the installation of new capital equipment. In this chapter it is found that investment raises labor productivity in the G7 countries and Australia. This finding implies that the decline in investment during the global financial crisis will have a long lasting detrimental effect on labor productivity and hence wages.
Pawley, J. and Juerg Weber, E. (2011), "Chapter 18 Investment, Technical Progress, and the Consequences of the Global Economic Crisis", de La Grandville, O. (Ed.) Economic Growth and Development (Frontiers of Economics and Globalization, Vol. 11), Emerald Group Publishing Limited, Bingley, pp. 483-492. https://doi.org/10.1108/S1574-8715(2011)0000011023
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