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Are Productivity Levels Higher in Some European Countries than in the United States?

Author

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  • Gilbert Cette

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Abstract

Estimates produced by the OECD indicate that labour productivity levels are higher in a number of European countries than in the United States, implying that Europe and not the United States is the world technological leader. The author argues that a structural measure of labour productivity, closer to a measure of technical efficiency, would take into account the much lower employment rates and hours of work in Europe. Low employment rates reflect the exclusion of certain low-porductivity groups such as the young and older workers from the labour force. Shorter average hours of work mean that workers experience less fatigue and are more focused when on the job. Consequently, the author argues that there are diminshing returns to the employment rate and hours of work in terms of productivity and that once these effects are taken into account, the United States reemerges as the world technology leader as manifested by labour productivity levels.

Suggested Citation

  • Gilbert Cette, 2005. "Are Productivity Levels Higher in Some European Countries than in the United States?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 59-68, Spring.
  • Handle: RePEc:sls:ipmsls:v:10:y:2005:4
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    References listed on IDEAS

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    1. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Jul, pages 2-13.
    2. Etienne Wasmer, 1999. "Changements de composition de la force de travail. Implications pour les salaires et le chômage," Économie et Prévision, Programme National Persée, vol. 138(2), pages 77-87.
    3. Nadim Ahmad & François Lequiller & Pascal Marianna & Dirk Pilat & Paul Schreyer & Anita Wölfl, 2003. "Comparing Labour Productivity Growth in the OECD Area: The Role of Measurement," OECD Science, Technology and Industry Working Papers 2003/14, OECD Publishing.
    4. Edmond Malinvaud, 1973. "Une explication de l'évolution de la productivité horaire du travail," Économie et Statistique, Programme National Persée, vol. 48(1), pages 46-50.
    5. Lecat, R., 2004. "Productivité du travail des grands pays industrialisés : la fin du rattrapage des États-Unis ?," Bulletin de la Banque de France, Banque de France, issue 121, pages 47-67.
    6. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 3-26, Fall.
    7. Dirk Pilat & Paul Schreyer, 2003. "Measuring productivity," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 127-170.
    8. Gilbert Cette & Jacques Mairesse & Yussuf Kocoglu, 2000. "La mesure de l'investissement en technologies de l'information et de la communication : quelques considérations méthodologiques," Économie et Statistique, Programme National Persée, vol. 339(1), pages 73-91.
    9. Cette, G. & Strauss-Kahn, M-O., 2003. "Productivité horaire et PIB par tête aux États-Unis et en France — Comparaisons et recommandations," Bulletin de la Banque de France, Banque de France, issue 120, pages 39-58.
    10. François Magnien, 2003. "Mesurer l'évolution des prix des services de téléphonie mobile : une entreprise difficile," Économie et Statistique, Programme National Persée, vol. 362(1), pages 3-31.
    11. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Renaud Bourlès & Gilbert Cette, 2006. "A comparison of structural productivity levels in the major industrialised countries," OECD Economic Studies, OECD Publishing, vol. 2005(2), pages 75-108.
    2. Bourles, Renaud & Cette, Gilbert, 2007. "Trends in "structural" productivity levels in the major industrialized countries," Economics Letters, Elsevier, vol. 95(1), pages 151-156, April.
    3. Ben Dolman & Dean Parham & Simon Zheng, 2007. "Can Australia Match US Productivity Performance?," Staff Working Papers 0703, Productivity Commission, Government of Australia.
    4. Andrew Sharpe, 2007. "Lessons for Canada from International Productivity Experience," International Productivity Monitor, Centre for the Study of Living Standards, vol. 14, pages 20-37, Spring.
    5. Raquel Ortega-Argilés, 2012. "The Transatlantic Productivity Gap: A Survey Of The Main Causes," Journal of Economic Surveys, Wiley Blackwell, vol. 26(3), pages 395-419, July.

    More about this item

    Keywords

    Productivity Growth; Productivity; Labour Productivity; Human Capital; Work Hours; Organization; Organizational Change; Organizational Innovation; Europe; United States;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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