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Labour productivity developments in the euro area

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Author Info

  • Ramon Gomez-Salvador
  • Alberto Musso
  • Marc Stocker
  • Jarkko Turunen

Abstract

This paper provides a description and a discussion of some important aspects relating to recent productivity developments in the euro area. Following decades of stronger gains in the euro area than in the US, labour productivity growth has fallen behind that in the US in recent years. This reflects a decline in average labour productivity growth observed in the euro area since the mid-1990s, which stands in sharp contrast with opposite developments in the US. The decline in labour productivity growth experienced in the euro area since the mid-1990s resulted from both lower capital deepening and lower total factor productivity growth. From a sectoral perspective, industries not producing or using intensively information and communication technology (ICT) would appear mostly responsible for the decline in average labour productivity growth since the mid-1990s. These developments were broadly experienced by most euro area countries. A comparison with developments in the US suggests that the euro area economy seems to have benefited much less from increased production and use of ICT technologies, in particular in the services sector. Diverging trends in labour productivity growth between the euro area and the US in recent years mainly reflect developments in a number of specific ICT-using services such as retail, wholesale and some financial services where strong gains were registered in the US. The evidence presented in this paper suggests that, in order to support economic growth in the euro area, emphasis should be given to both policy measures that directly address the determinants of productivity and, given the interactions among the various factors of growth, to policies that raise labour utilisation.

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Bibliographic Info

Paper provided by European Central Bank in its series Occasional Paper Series with number 53.

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Length: 33 pages
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:ecb:ecbops:20060053

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Citations

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Cited by:
  1. Jean-Claude Trichet, 2011. "Achieving maximum long-term growth," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 427-449.
  2. McAdam, Peter & Willman, Alpo, 2008. "Medium run redux: technical change, factor shares and frictions in the euro area," Working Paper Series 0915, European Central Bank.
  3. Sra Chuenchoksan & Don Nakornthab, 2008. "Past, Present, and Prospects for Thailand’s Growth: A Labor Market Perspective," Working Papers 2008-07, Economic Research Department, Bank of Thailand.
  4. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2008. "A Retrospective Look at the U.S. Productivity Growth Resurgence," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 3-24, Winter.
  5. Filippo di Mauro & Katrin Forster, 2008. "Globalisation and the competitiveness of the euro area," Occasional Paper Series 97, European Central Bank.
  6. Melchor Fernandez & Yolanda Pena-Boquete, 2011. "Macroeconomic consequences of gender discrimination: a preliminary approach (refereed paper)," ERSA conference papers ersa10p1066, European Regional Science Association.
  7. Yolanda Pena-Boquete & Melchor Fernandez, 2011. "Could gender wage discrimination explain regional differences in productivity?," ERSA conference papers ersa11p1272, European Regional Science Association.
  8. Ortega-Argilés, Raquel & Piva, Mariacristina & Vivarelli, Marco, 2011. "The Transatlantic Productivity Gap: Is R&D the Main Culprit?," IZA Discussion Papers 5586, Institute for the Study of Labor (IZA).
  9. McAdam, Peter & Willman, Alpo, 2013. "Medium Run Redux," Macroeconomic Dynamics, Cambridge University Press, vol. 17(04), pages 695-727, June.
  10. Guido Schwerdt & Jarkko Turunen, 2007. "Changes in Human Capital: Implications for Productivity Growth in the Euro Area," Ifo Working Paper Series Ifo Working Paper No. 53, Ifo Institute for Economic Research at the University of Munich.
  11. Robert Anderton & Paul Hiebert, . "The Impact of Globalisation on the Euro Area Macroeconomy," Discussion Papers 09/14, University of Nottingham, GEP.
  12. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada.
  13. Fabio Balboni & Marco Buti & Martin Larch, 2007. "ECB vs Council vs Commission: Monetary and fiscal policy interactions in the EMU when cyclical conditions are uncertain," European Economy - Economic Papers 277, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  14. Marco Buti & Martin Larch & Fabio Balboni, 2009. "Monetary and fiscal policy interactions in the EMU when cyclical conditions are uncertain," Empirica, Springer, vol. 36(1), pages 21-44, February.
  15. Linehan, Suzanne & McQuinn, Kieran, 2008. "A Sectoral Analysis of the Average Work Week in Euro Area Countries," Quarterly Bulletin Articles, Central Bank of Ireland, pages 68-88, October.
  16. Stefan W. Schmitz, 2007. "Demographic Change, Bank Strategy and Financial Stability," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 13.
  17. Krasnopjorovs, Olegs, 2013. "Latvijas ekonomikas izaugsmi noteicošie faktori
    [Factors of Economic Growth in Latvia]
    ," MPRA Paper 47550, University Library of Munich, Germany.

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