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Productivity in the euro area: any evidence of convergence?

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  • Sondermann, David

Abstract

Sizable prevailing real economic disparities among countries in a currency union potentially involve costs for those countries for which the aggregate policy stance is not appropriate. This paper contributes to the literature by testing for productivity convergence among euro area countries. While no convergence can be found on the aggregate level, selected service sectors and manufacturing sub-industries indicate evidence of convergence. In a search for factors influencing productivity, investments in research and development as well as a high skill level of employees are shown to be beneficial whereas regulations constitute a burden. Consequently, euro area countries should engage in structural reforms where necessary to provide a more competitive environment, eventually facilitating economic convergence. JEL Classification: C33, O47, J24, L60, L80

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1431.

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Date of creation: Apr 2012
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Handle: RePEc:ecb:ecbwps:20121431

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Keywords: convergence; manufacturing and service sector; panel unit root test; productivity;

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Cited by:
  1. Calcagnini, Giorgio & Travaglini, Giuseppe, 2014. "A time series analysis of labor productivity. Italy versus the European countries and the U.S," Economic Modelling, Elsevier, vol. 36(C), pages 622-628.

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