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Distance to Technological Frontier, Market Rigidities, Education, and Growth

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  • Philippe Aghion

    (Harvard University, École dÉconomie de Paris, Université de la Méditerranée (Greqam), Banque de France (DEMS) and Université de la Méditerranée (Defi), École dÉconomie de Paris)

  • Philippe Askenazy

    (Harvard University, École dÉconomie de Paris, Université de la Méditerranée (Greqam), Banque de France (DEMS) and Université de la Méditerranée (Defi), École dÉconomie de Paris)

  • Renaud Bourlès

    (Harvard University, École dÉconomie de Paris, Université de la Méditerranée (Greqam), Banque de France (DEMS) and Université de la Méditerranée (Defi), École dÉconomie de Paris)

  • Gilbert Cette

    (Harvard University, École dÉconomie de Paris, Université de la Méditerranée (Greqam), Banque de France (DEMS) and Université de la Méditerranée (Defi), École dÉconomie de Paris)

  • Nicolas Dromel

    (Harvard University, École dÉconomie de Paris, Université de la Méditerranée (Greqam), Banque de France (DEMS) and Université de la Méditerranée (Defi), École dÉconomie de Paris)

Abstract

We exploit panel data on 17 OECD countries for the period 1985-2003. Our main findings are the characterization of the effects of (1) the education level of the workforce and (2) rigidities in the product market and labour market on total factor productivity (TFP) growth. Close to the technological frontier these effects are highly significant and an interaction between the rigidities in the two markets is clearly visible. The strong impact of higher-education level and rigidities on TFP growth appears to reflect a direct influence and an indirect effect via the diffusion of ICTs. In the goods market, the entry barriers, market structure, and degree of vertical integration seem to have a major influence. For countries far from the technological frontier, the higher-education level of the workforce and rigidities in the product market and labour market do not necessarily have a significant impact on TFP growth.

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Bibliographic Info

Article provided by Institut National de la Statistique et des Etudes Economiques in its journal Economie et Statistique.

Volume (Year): 419-420 (2009)
Issue (Month): (August)
Pages: 11-30

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Handle: RePEc:crs:ecosta:es419-420b

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Keywords: Productivity; Growth; Regulations; Market Rigidities; Education;

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  1. Philippe Aghion & Peter Howitt, 2006. "Joseph Schumpeter Lecture Appropriate Growth Policy: A Unifying Framework," Journal of the European Economic Association, MIT Press, MIT Press, vol. 4(2-3), pages 269-314, 04-05.
  2. Orszag, J. Michael & Snower, Dennis J., 1998. "Anatomy of Policy Complementarities," Working Paper Series, Research Institute of Industrial Economics 500, Research Institute of Industrial Economics.
  3. Paul Conway & Donato de Rosa & Giuseppe Nicoletti & Faye Steiner, 2006. "Regulation, Competition and Productivity Convergence," OECD Economics Department Working Papers 509, OECD Publishing.
  4. Olivier Blanchard & Francesco Giavazzi, . "Macroeconomic effects of regulation and deregulation in goods and labor markets," Working Papers 187, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  5. Gilbert Cette & Jimmy Lopez, 2008. "What Explains the ICT Diffusion Gap Between the Major Industrialized Countries: An Empirical Analysis?," International Productivity Monitor, Centre for the Study of Living Standards, Centre for the Study of Living Standards, vol. 17, pages 28-39, Fall.
  6. Nicoletti, Giuseppe & Scarpetta, Stefano, 2003. "Regulation, productivity, and growth : OECD evidence," Policy Research Working Paper Series 2944, The World Bank.
  7. Nicholas Crafts, 2006. "Regulation and Productivity Performance," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 22(2), pages 186-202, Summer.
  8. Orszag, Mike & Snower, Dennis J., 1998. "Anatomy of policy complementarities," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 2252, Kiel Institute for the World Economy (IfW).
  9. Amable, Bruno & Demmouy, Lilas & Ledezma, Ivan, 2008. "Competition, Innovation and Distance to Frontier," Economics Papers from University Paris Dauphine 123456789/6914, Paris Dauphine University.
  10. Giuseppe Nicoletti & Stefano Scarpetta, 2005. "Regulation and Economic Performance: Product Market Reforms and Productivity in the OECD," OECD Economics Department Working Papers 460, OECD Publishing.
  11. Christopher Gust & Jaime Marquez, 2002. "International comparisons of productivity growth: the role of information technology and regulatory practices," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 727, Board of Governors of the Federal Reserve System (U.S.).
  12. Olivier Blanchard, 2005. "European Unemployment: The Evolution of Facts and Ideas," NBER Working Papers 11750, National Bureau of Economic Research, Inc.
  13. Bourlès, Renaud & Cette, Gilbert, 2005. "A comparison of structural productivity levels in the major industrialised countries," MPRA Paper 7330, University Library of Munich, Germany.
  14. Renaud Bourlès & Gilbert Cette, 2005. "Une comparaison des niveaux de productivité structurels des grands pays industrialisés," Revue économique de l'OCDE, OECD Publishing, OECD Publishing, vol. 2005(2), pages 83-117.
  15. Bourlès, R. & Cette, G., 2006. "Trends in "structural" productivity levels in the major industrialized countries," Working papers, Banque de France 156, Banque de France.
  16. Bruno Amable & Donatella Gatti, 2006. "Labor and product market reforms: questioning policy complementarity," Industrial and Corporate Change, Oxford University Press, vol. 15(1), pages 101-122, February.
  17. repec:fth:iniesr:500 is not listed on IDEAS
  18. Koeniger, Winfried & Vindigni, Andrea, 2003. "Employment Protection and Product Market Regulation," IZA Discussion Papers 880, Institute for the Study of Labor (IZA).
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Cited by:
  1. Cette, G. & Lopez, J., 2009. "ICT Demand Behaviour: an International Comparison," Working papers, Banque de France 252, Banque de France.

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