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Technology catching-up and regulation in European regions

Author

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  • Francisco Javier Escribá-Pérez

    (Facultat dEconomia, Universitat de València)

  • María José Murgui-García

    (Facultat dEconomia, Universitat de València)

Abstract

This paper analyses the effects of the intensity of regulations in the product and labour markets on the growth of total factor productivity (TFP) for 121 European regions. A technological catch-up model is estimated for the period 1995–2007. We use the spatial lag of X (SLX) model to capture possible spatial interactions across spatial units. Our empirical findings show that lower levels of regulation are associated with higher TFP growth. Lower barriers to entrepreneurship and lower bureaucratic costs have a positive effect on productivity growth. Corruption raises operational costs, distorts the allocation of resources and negatively affects innovation activities, thereby reducing TFP growth. Further liberalization in the labour market (in terms of hiring and firing regulation, working hours regulation and employment protection legislation) has a significant positive effect on the growth of TFP. In addition, both regional technological and regional human capital have a positive impact on the TFP growth in European regional economies.

Suggested Citation

  • Francisco Javier Escribá-Pérez & María José Murgui-García, 2018. "Technology catching-up and regulation in European regions," Journal of Productivity Analysis, Springer, vol. 49(1), pages 95-109, February.
    • Handle: RePEc:kap:jproda:v:49:y:2018:i:1:d:10.1007_s11123-017-0524-4
    DOI: 10.1007/s11123-017-0524-4
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    More about this item

    Keywords

    Productivity; Regulation; Human capital; Technology capital; Catch-up; European regions;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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