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Structural changes and labor productivity slowdown in the Euro Area

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  • MARCELLO M. ESTEVÃO

Abstract

Slow productivity growth has plagued the euro area since the mid-1990s. That is particularly striking in view of the large productivity gains in the United States during the same period. This paper shows that the deceleration in labor productivity in the euro area was caused by structural changes in wage formation that have affected the relative price of labor, increased the labor intensity of growth, and, thus, reduced the rate of capital deepening. Technological shocks seem to have played a minor role in explaining this deceleration. This is a general economic effect that may surface in other countries as they fi ght to lower unemployment rates.

Suggested Citation

  • Marcello M. Estevão, 2007. "Structural changes and labor productivity slowdown in the Euro Area," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 25(53), pages 336-367, January.
    • Handle: RePEc:bdr:ensayo:v:25:y:2007:i:53:p:336-367
    DOI: 10.32468/Espe.5308
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    Cited by:

    1. Andrea De Michelis & Marcello Estevão & Beth Anne Wilson, 2013. "Productivity or Employment: Is It a Choice?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 41-60, Spring.

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    More about this item

    Keywords

    productivity growth; structural change; wage bargaining; employment creation;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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