Productivity Puzzles Across Europe

The 2008 financial crisis put an end to an era of sustained economic growth in Europe. The size of the shock differed across European countries and affected economies in different ways. Yet despite this heterogeneity, most European countries suffered a prolonged period of economic slowdown which raised concerns about the risk of a secular stagnation in Europe. This book focuses on labour productivity in Europe, one of the main drivers of growth and prosperity. Although productivity trends became the focus of policy interest in the immediate aftermath of the recession in the UK, 'productivity puzzles' received much less attention in the rest of Europe. These 'puzzles', which are apparent to greater or lesser extents in most European economies, centre on the marked decline in labour productivity growth which occurred with the on-set of recession. They are puzzles because, in neo-classical economics, firms respond to demand shocks by laying off workers, thus maintaining labour productivity and limiting growth in unit labour costs. Yet this didn't happen in this recession - at least, not to the same extent as in previous recessions, except in Spain. This book brings together contributions from leading European economists who analyse production models and macroeconomic policies, with specific focus on European countries that represent around 60% of the EU GDP. Chapters on France, Germany, the UK, and Spain provide new evidences at the firm/workplace level, and stress the role of transitory labour market mechanisms Contributors to this volume - Dan Andrews, OECD Philippe Askenazy, CNRS- Paris School of Economics and Ecole Normale Superieure Lutz Bellmann, University of Erlangen-Nuremberg Tito Boeri, INPS Alex Bryson, UCL Martin Chevalier, INSEE Nicholas Crafts, University of Warwick Eva Moreno-Galbis, University of Maine Hans-Dieter Gerner, University of Applied Sciences Koblenz Christine Erhel, University Paris 1 Pantheon-Sorbonne John Forth, National Institute of Economic and Social Research Laura Hospido, Bank of Spain Marie-Christine Laible, Institute for Employment Research Nuremberg Marcel Timmer, University of Groningen Bart van Ark, The Conference Board