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Trends of labour productivity in Italy: a study with panel co-integration methods

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  • Stefano Fachin
  • Andrea Gavosto

Abstract

Purpose – The main aim of this paper is to examine labour productivity trends in Italy over the period 1981-2004. Design/methodology/approach – To this end, relying on recent developments in the analysis of non-stationary dependent panels, the paper develops a new method for estimating total factor productivity (TFP) trends. Findings – The conclusions confirm the view that the recent decline in Italian labour productivity growth is mostly due to a widespread fall in TFP growth. Research limitations/implications – The main assumption underlying the proposed TFP estimation method is that technology growth is driven by a single trend common to all units included in the panel (industries, regions or countries). Originality/value – The paper provides two distinct contributions: empirically, it provides robust evidence that TFP slow-down is the main cause of recent negative trends in labour productivity in Italy. Methodologically, the paper proposes an approach to estimating TFP that enjoys several advantages: only basic data for input and output flows are needed, the non-stationary nature of the data is explicitly taken into account, and confidence intervals for TFP growth can be computed. This method can thus be easily applied to many routinely available datasets, to either corroborate existing growth accounting estimates or to obtain previously unavailable estimates.

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal International Journal of Manpower.

Volume (Year): 31 (2010)
Issue (Month): 7 (November)
Pages: 755-769

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Handle: RePEc:eme:ijmpps:v:31:y:2010:i:7:p:755-769

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References

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  1. Edward J. Balistreri & Christine A. McDaniel & Eina Vivian Wong, 2003. "An Estimation of U.S. Industry-Level Capital-Labor Substitution," Computational Economics 0303001, EconWPA.
  2. Stefano Fachin, 2007. "Long-run trends in internal migrations in italy: a study in panel cointegration with dependent units," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 401-428.
  3. Cheng Hsiao & Yan Shen & Hiroshi Fujiki, 2002. "Aggregate vs Disaggregate Data Analysis - A Paradox in the Estimation of Money Demand Function of Japan Under the Low Interest Rate Policy," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A4-1, International Conferences on Panel Data.
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  8. Vincenzo Atella & Beniamino Quintieri, 2001. "Do R&D expenditures really matter for TFP?," Applied Economics, Taylor & Francis Journals, vol. 33(11), pages 1385-1389.
  9. Balistreri, Edward J. & McDaniel, Christine A. & Wong, Eina Vivian, 2003. "An estimation of US industry-level capital-labor substitution elasticities: support for Cobb-Douglas," The North American Journal of Economics and Finance, Elsevier, vol. 14(3), pages 343-356, December.
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  14. Psaradakis, Zacharias, 2001. "On bootstrap inference in cointegrating regressions," Economics Letters, Elsevier, vol. 72(1), pages 1-10, July.
  15. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
  16. R. Paci & R. Pala & E. Marrocu, 2000. "Estimation of total factor productivity for regions and sectors in Italy. A panel cointegration approach," Working Paper CRENoS 200016, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  17. Russell Davidson & James G. MacKinnon, 2000. "Improving the Reliability of Bootstrap Tests," Working Papers 995, Queen's University, Department of Economics.
  18. n/a, 1997. "Trade with China: Do the Figures Add up?," NIESR Discussion Papers 219, National Institute of Economic and Social Research.
  19. Kee Hiau Looi, 2004. "Estimating Productivity When Primal and Dual TFP Accounting Fail: An Illustration Using Singapore's Industries," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-40, October.
  20. Altissimo, F. & Marchetti, D.J. & Oneto, G.P., 2000. "The Italian Business Cycle: Coincident and Leading Indicators and Some Stylized Facts," Papers 377, Banca Italia - Servizio di Studi.
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