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Trends of labour productivity in Italy: a study with panel co-integration methods

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  • Stefano Fachin
  • Andrea Gavosto

Abstract

Purpose - The main aim of this paper is to examine labour productivity trends in Italy over the period 1981-2004. Design/methodology/approach - To this end, relying on recent developments in the analysis of non-stationary dependent panels, the paper develops a new method for estimating total factor productivity (TFP) trends. Findings - The conclusions confirm the view that the recent decline in Italian labour productivity growth is mostly due to a widespread fall in TFP growth. Research limitations/implications - The main assumption underlying the proposed TFP estimation method is that technology growth is driven by a single trend common to all units included in the panel (industries, regions or countries). Originality/value - The paper provides two distinct contributions: empirically, it provides robust evidence that TFP slow-down is the main cause of recent negative trends in labour productivity in Italy. Methodologically, the paper proposes an approach to estimating TFP that enjoys several advantages: only basic data for input and output flows are needed, the non-stationary nature of the data is explicitly taken into account, and confidence intervals for TFP growth can be computed. This method can thus be easily applied to many routinely available datasets, to either corroborate existing growth accounting estimates or to obtain previously unavailable estimates.

Suggested Citation

  • Stefano Fachin & Andrea Gavosto, 2010. "Trends of labour productivity in Italy: a study with panel co-integration methods," International Journal of Manpower, Emerald Group Publishing, vol. 31(7), pages 755-769, October.
  • Handle: RePEc:eme:ijmpps:v:31:y:2010:i:7:p:755-769
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    References listed on IDEAS

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    1. R. Pala & E. Marrocu & R. Paci, 2000. "Estimation of total factor productivity for regions and sectors in Italy. A panel cointegration approach," Working Paper CRENoS 200016, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
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    Cited by:

    1. B. Biagi & MG. Ladu, 2015. "Productivity and employment dynamics: new evidence from Italian regions," Working Paper CRENoS 201505, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    2. Renzo Orsi & Francesco Turino, 2014. "The last fifteen years of stagnation in Italy: a business cycle accounting perspective," Empirical Economics, Springer, vol. 47(2), pages 469-494, September.
    3. Francesca Di Iorio & Stefano Fachin, 2014. "Dealing with unobservable common trends in small samples: a panel cointegration approach," DSS Empirical Economics and Econometrics Working Papers Series 2014/5, Centre for Empirical Economics and Econometrics, Department of Statistics, "Sapienza" University of Rome.

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    Keywords

    Productivity rate; Labour; Italy;

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