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Employment-Productivity Trade-off and Labour Composition

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  • Hervé Boulhol
  • Laure Turner

Abstract

This paper formalises the analysis of the employment-productivity trade-off by extending the framework developed by Gordon (1997) to account for labour heterogeneity. The extent of the trade-off is determined by the extent of the adjustment of capital to effective labour and by the changes in aggregate labour quality. The main experiment reported in the paper consists of assessing the labour utilisation and productivity impacts in OECD countries of aligning group-specific employment rates to the US levels. Matching the US employment performance defined in that sense would enable low-employment OECD countries to reduce only half of the aggregate employment-rate gap vis-à-vis the United States, the other half being mechanically due to differences in the population structure by age and educational attainment. In this experiment, a 1% gain in employment is associated with a decrease of 0.24% in labour productivity on average across countries, and of 0.35% in low-employment countries. Compromis emploi - productivité et effets de composition Cette étude formalise l’analyse du compromis entre emploi et productivité en étendant le cadre développé par Gordon (1997) pour prendre en compte l’hétérogénéité de la main-d’oeuvre. L’ampleur de ce compromis est déterminée par l’étendue de l’ajustement du capital à la main-d’oeuvre effective et par les changements dans la qualité de la main-d’oeuvre. La principale expérience rapportée dans l’étude consiste en l’évaluation de l’impact sur l’utilisation de la main-d’oeuvre et sur la productivité du travail de l’alignement, pour chaque pays de l’OCDE, des taux d’emplois par groupe de population sur ceux des États-Unis. Répliquant la performance des États-Unis ainsi définie permettrait aux pays de l’OCDE ayant un faible niveau d’emplois de réduire seulement la moitié de l’écart de taux d’emploi agrégé vis-à-vis des États-Unis, l’autre moitié étant due mécaniquement à la structure de la population par âge et niveau d’éducation. Dans cette expérience, des gains de 1% en termes d’emplois sont associés à une baisse de 0.24% de la productivité du travail en moyenne pour les pays de l’OCDE et de 0.35% pour les pays ayant les niveaux d’emplois les plus bas.

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File URL: http://dx.doi.org/10.1787/224146182015
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 698.

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Date of creation: 14 May 2009
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Handle: RePEc:oec:ecoaaa:698-en

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Keywords: aggregate employment; quality of labour; labour productivity; demographics; qualité de l'emploi; productivité du travail; démographie; emploi agrégé;

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References

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  1. Bloom, David E. & Canning, David & Fink, Gunther & Finlay, Jocelyn E., 2007. "Does age structure forecast economic growth?," International Journal of Forecasting, Elsevier, Elsevier, vol. 23(4), pages 569-585.
  2. Hubert Strauss & Christine de la Maisonneuve, 2007. "The Wage Premium on Tertiary Education: New Estimates for 21 OECD Countries," OECD Economics Department Working Papers 589, OECD Publishing.
  3. Christopher Gust & Jaime Marquez, 2002. "International comparisons of productivity growth: the role of information technology and regulatory practices," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 727, Board of Governors of the Federal Reserve System (U.S.).
  4. Guido Schwerdt & Jarkko Turunen, 2007. "Growth In Euro Area Labor Quality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 716-734, December.
  5. Belorgey, N. & Lecat, R. & Maury, P-M., 2004. "Determinants of Productivity per Employee: an Empirical Estimation Using Panel Data," Working papers, Banque de France 110, Banque de France.
  6. Bourlès, R. & Cette, G., 2005. "A comparison of Structural Productivity Levels in the Major Industrialised Countries," Working papers, Banque de France 133, Banque de France.
  7. Paul Beaudry & Fabrice Collard, 2002. "Why has the Employment-Productivity Tradeoff among Industrialized Countries been so strong?," NBER Working Papers 8754, National Bureau of Economic Research, Inc.
  8. Martin Werding, 2008. "Ageing and Productivity Growth: Are there Macro-level Cohort Effects of Human Capital?," CESifo Working Paper Series 2207, CESifo Group Munich.
  9. Hervé Boulhol, 2009. "The Effects of Population Structure on Employment and Productivity," OECD Economics Department Working Papers 684, OECD Publishing.
  10. Renaud Bourlès & Gilbert Cette, 2005. "Une comparaison des niveaux de productivité structurels des grands pays industrialisés," Revue économique de l'OCDE, OECD Publishing, OECD Publishing, vol. 2005(2), pages 83-117.
  11. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, Elsevier, vol. 4(2), pages 115-145, May.
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Cited by:
  1. Nilsen, Øivind Anti & Raknerud, Arvid & Rybalka, Marina & Skjerpen, Terje, 2010. "The Importance of Skill Measurement for Growth Accounting," IZA Discussion Papers 4997, Institute for the Study of Labor (IZA).
  2. Renaud Bourlès & Gilbert Cette & Anastasia Cozarenco, 2012. "Employment and Productivity: Disentangling Employment Structure and Qualification Effects," International Productivity Monitor, Centre for the Study of Living Standards, Centre for the Study of Living Standards, vol. 23, pages 44-54, Spring.
  3. Junankar, Pramod N. (Raja), 2013. "Is there a Trade-off between Employment and Productivity?," IZA Discussion Papers 7717, Institute for the Study of Labor (IZA).
  4. Clément Bosquet & Michel Fouquin, 2009. "Productivité du travail : les divergences entre pays développés sont-elles durables," Working Papers 2009-02, CEPII research center.

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