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

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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.:
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Full references

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. Ian Dew-Becker & Robert J. Gordon, 2008. "The Role of Labor Market Changes in the Slowdown of European Productivity Growth," NBER Working Papers 13840, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Dana Hajkova, 2008. "The Measurement of Capital Services in the Czech Republic," Working Papers 2008/11, Czech National Bank, Research Department. [Downloadable!]
  3. 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. [Downloadable!]
  4. Mcquinn, Kieran & Whelan, Karl, 2006. "Prospects for Growth in the Euro Area," MPRA Paper 5893, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  5. Panayiotis P. Athanasoglou & Evangelia A. Georgiou & Christos C. Staikouras, 2008. "Assessing Output and Productivity Growth in the Banking Industry," Working Papers 92, Bank of Greece. [Downloadable!]
  6. Guido Schwerdt & Jarkko Turunen, 2009. "Labor Quality Growth in Germany," Ifo Working Paper Series Ifo Working Paper No. 77, Ifo Institute for Economic Research at the University of Munich. [Downloadable!]
  7. Channing Arndt & Sam Jones & Finn Tarp, 2006. "Aid and Development: The Mozambican Case," Discussion Papers 06-13, University of Copenhagen. Department of Economics. [Downloadable!]
  8. Aitor Lacuesta & Sergio Puente & Pilar Cuadrado, 2009. "Omitted variables in the measure of a labour quality index: the case of Spain," Banco de España Working Papers 0835, Banco de España. [Downloadable!]
  9. 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 Group Munich. [Downloadable!]
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