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Growth in euro area labour quality

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Author Info
Guido Schwerdt () (European University Institute, Department of Economics, Villa San Paolo, Via della Piazzuola 43, 50133 Florence, Italy)
Jarkko Turunen () (European Central Bank, DG-Economics, Kaiserstrasse 29, Postfach 16 03 19, 60066 Frankfurt am Main, Germany.)

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Abstract

Composition of the euro area workforce evolves over time and in response to changing labour market conditions. We construct an estimate of growth in euro area labour quality over the period 1983-2004 and show that labour quality has grown on average by 0.6% year-on-year over this time period. Labour quality growth was significantly higher in the early 1990s than in the 1980s. This strong increase was driven by an increase in the share of those with tertiary education and workers in prime age. Growth in labour quality moderated again towards the end of the 1990’s, possibly reflecting the impact of robust employment growth resulting in the entry of workers with lower human capital. Labour quality growth has on average accounted for nearly one third of euro area labour productivity growth. The results point to a significant decline in the contribution of total factor productivity to euro area growth. JEL Classification: E24; J24; O47.

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Paper provided by European Central Bank in its series Working Paper Series with number 575.

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Length: 40 pages
Date of creation: Jan 2006
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Handle: RePEc:ecb:ecbwps:20060575

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Keywords: Human capital labour quality total factor productivity growth accounting.

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  3. Daniel Aaronson & Daniel Sullivan, 2001. "Growth in worker quality," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 53-74. [Downloadable!]
  4. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 2000. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," NBER Working Papers 7457, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Eric A. Hanushek & Dennis D. Kimko, 2000. "Schooling, Labor-Force Quality, and the Growth of Nations," American Economic Review, American Economic Association, vol. 90(5), pages 1184-1208, December. [Downloadable!] (restricted)
  6. Fosgerau, Mogens & Jensen, Svend E Hougaard & Sorensen, Anders, 2002. "Measuring Educational Heterogeneity and Labor Quality: A Note," Review of Income and Wealth, Blackwell Publishing, vol. 48(2), pages 261-69, June. [Downloadable!] (restricted)
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  10. Focco Vijselaar & Ronald Albers, 2004. "New technologies and productivity growth in the euro area," Empirical Economics, Springer, vol. 29(3), pages 621-646, 09. [Downloadable!] (restricted)
  11. Mark Bils & Peter J. Klenow, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December. [Downloadable!] (restricted)
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  14. Dirk Krueger & Krishna B. Kumar, 2004. "Skill-Specific rather than General Education: A Reason for US--Europe Growth Differences?," Journal of Economic Growth, Springer, vol. 9(2), pages 167-207, 06. [Downloadable!]
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  15. Wasmer, Etienne, 2003. "Interpreting European and US Labour Market Differences: The Specificity of Human Capital Investments," CEPR Discussion Papers 3780, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  16. Brunello, Giorgio & Lauer, Charlotte, 2004. "Are Wages in Southern Europe More Flexible? The Effects of Cohort Size on European Earnings," IZA Discussion Papers 1299, Institute for the Study of Labor (IZA). [Downloadable!]
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  17. Lee, Jong-Wha & Barro, Robert J, 2001. "Schooling Quality in a Cross-Section of Countries," Economica, London School of Economics and Political Science, vol. 68(272), pages 465-88, November. [Downloadable!] (restricted)
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  18. Alan B. Krueger & Mikael Lindahl, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December. [Downloadable!] (restricted)
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  19. Dale Jorgenson & Mun Ho & Kevin Stiroh, 2003. "Growth of US Industries and Investments in Information Technology and Higher Education," Economic Systems Research, Taylor and Francis Journals, vol. 15(3), pages 279-325, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Theo Eicher & Oliver Röhn, 2007. "Sources of the German Productivity Demise – Tracing the Effects of Industry-Level ICT Investment," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  2. Mcquinn, Kieran & Whelan, Karl, 2006. "Prospects for Growth in the Euro Area," MPRA Paper 5893, University Library of Munich, Germany. [Downloadable!]
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