IDEAS home Printed from https://ideas.repec.org/p/bdi/opques/qef_918_25.html
   My bibliography  Save this paper

The slowdown of productivity in the euro area and the role of input prices

Author

Listed:
  • Fabrizio Colonna

    (Bank of Italy)

  • Filippo Scoccianti

    (Bank of Italy)

  • Eliana Viviano

    (Bank of Italy)

Abstract

We examine how changes in the relative prices of intermediate goods, labour and capital between 2021 and 2023 contributed to the stagnation of labour productivity in the euro area. The evidence for Germany, Italy and France shows that in addition to a significant increase in the cost of intermediate goods in 2021-22, the cost of capital also rose sharply in 2022-23, affecting the relative prices of production factors. The substitution of inputs in favour of labour explains the slowdown in labour productivity observed between 2021 and 2023. Moreover, since firms adjust their use of production factors with some lag and the prices of intermediate goods and capital relative to labour were still very high in 2024 compared with pre-pandemic levels, this substitution channel may hinder the rapid return of labour productivity to its pre-pandemic trend.

Suggested Citation

  • Fabrizio Colonna & Filippo Scoccianti & Eliana Viviano, 2025. "The slowdown of productivity in the euro area and the role of input prices," Questioni di Economia e Finanza (Occasional Papers) 918, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_918_25
    as

    Download full text from publisher

    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2025-0918/QEF_918_25.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Erik Brynjolfsson & John J. Horton & Adam Ozimek & Daniel Rock & Garima Sharma & Hong-Yi TuYe, 2020. "COVID-19 and Remote Work: An Early Look at US Data," NBER Working Papers 27344, National Bureau of Economic Research, Inc.
    2. Daron Acemoglu & Pascual Restrepo, 2020. "Robots and Jobs: Evidence from US Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2188-2244.
    3. Thomas Patten Krumel & Corey Goodrich & Nathan Fiala, 2023. "Labour demand in the time of post-COVID-19," Applied Economics Letters, Taylor & Francis Journals, vol. 30(3), pages 343-348, February.
    4. Lopez-Garcia, Paloma & Modery, Wolfgang & Lalinsky, Tibor & Bijnens, Gert & Anghel, Brindusa & Bunel, Simon & Valderrama, Maria, 2024. "The impact of recent shocks and ongoing structural changes on euro area productivity growth," Economic Bulletin Articles, European Central Bank, vol. 2.
    5. Chiara Criscuolo & Peter Gal & Timo Leidecker & Francesco Losma & Giuseppe Nicoletti, 2021. "The role of telework for productivity during and post-COVID-19: Results from an OECD survey among managers and workers," OECD Productivity Working Papers 31, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bergeaud, Antonin & Eyméoud, Jean-Benoît & Garcia, Thomas & Henricot, Dorian, 2023. "Working from home and corporate real estate," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    2. Barry, John W. & Campello, Murillo & Graham, John R. & Ma, Yueran, 2022. "Corporate flexibility in a time of crisis," Journal of Financial Economics, Elsevier, vol. 144(3), pages 780-806.
    3. Cevat Giray Aksoy & Jose Maria Barrero & Nicholas Bloom & Steven J. Davis & Mathias Dolls & Pablo Zarate, 2022. "Working from Home Around the World," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 53(2 (Fall)), pages 281-360.
    4. Caselli, Mauro & Fracasso, Andrea, 2021. "Covid-19 and Technology," GLO Discussion Paper Series 1001, Global Labor Organization (GLO).
    5. Antonin Bergeaud & Jean-Benoît Eymeoud & Thomas Garcia & Dorian Henricot, 2022. "Working From Home and Corporate Real Estate," Post-Print hal-03548889, HAL.
    6. Pedro H. Albuquerque & Sophie Albuquerque, 2023. "Social Implications of Technological Disruptions: A Transdisciplinary Cybernetics Science and Occupational Science Perspective," AMSE Working Papers 2313, Aix-Marseille School of Economics, France.
    7. Makridis, Christos A. & Han, Joo Hun, 2021. "Future of work and employee empowerment and satisfaction: Evidence from a decade of technological change," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    8. Antonin Bergeaud & Jean Benoit Eymeoud & Thomas Garcia & Dorian Henricot, 2022. "Working from home and corporate real estate," CEP Discussion Papers dp1831, Centre for Economic Performance, LSE.
    9. Erdsiek, Daniel & Rost, Vincent, 2022. "Working from home after COVID-19: Firms expect a persistent and intensive shift," ZEW Expert Briefs 22-06, ZEW - Leibniz Centre for European Economic Research.
    10. Cette, Gilbert & Devillard, Aurélien & Spiezia, Vincenzo, 2021. "The contribution of robots to productivity growth in 30 OECD countries over 1975–2019," Economics Letters, Elsevier, vol. 200(C).
    11. Tao Chen & Shuwen Pi & Qing Sophie Wang, 2025. "Artificial Intelligence and Corporate Investment Efficiency: Evidence from Chinese Listed Companies," Working Papers in Economics 25/05, University of Canterbury, Department of Economics and Finance.
    12. Nicholas Bloom & Tarek Alexander Hassan & Aakash Kalyani & Josh Lerner & Ahmed Tahoun, 2021. "The diffusion of disruptive technologies," CEP Discussion Papers dp1798, Centre for Economic Performance, LSE.
    13. Keller, Wolfgang & Utar, Hale, 2023. "International trade and job polarization: Evidence at the worker level," Journal of International Economics, Elsevier, vol. 145(C).
    14. Dennis C. Hutschenreiter & Tommaso Santini & Eugenia Vella, 2022. "Automation and sectoral reallocation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 13(1), pages 335-362, May.
    15. Basso, Henrique S. & Jimeno, Juan F., 2021. "From secular stagnation to robocalypse? Implications of demographic and technological changes," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 833-847.
    16. Raymond Hernandez & Elizabeth A. Pyatak & Cheryl L. P. Vigen & Haomiao Jin & Stefan Schneider & Donna Spruijt-Metz & Shawn C. Roll, 2021. "Understanding Worker Well-Being Relative to High-Workload and Recovery Activities across a Whole Day: Pilot Testing an Ecological Momentary Assessment Technique," IJERPH, MDPI, vol. 18(19), pages 1-17, October.
    17. Piketty, Thomas & Bozio, Antoine & Garbinti, Bertrand & Goupille-Lebret, Jonathan & Guillot, Malka, 2020. "Predistribution vs. Redistribution: Evidence from France and the U.S," CEPR Discussion Papers 15415, C.E.P.R. Discussion Papers.
    18. Uwe JIRJAHN & Stephen C. SMITH, 2018. "Nonunion Employee Representation: Theory And The German Experience With Mandated Works Councils," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 201-233, March.
    19. Federico Huneeus & Kory Kroft & Kevin Lim, 2021. "Earnings Inequality in Production Networks," NBER Working Papers 28424, National Bureau of Economic Research, Inc.
    20. Chen, Wenrui & Chen, Zhiwu & Qin, Ling & Shan, Yaowen & Xu, Weihang, 2024. "Strategic alliance, agency problems, and labor investment efficiency," Economic Modelling, Elsevier, vol. 139(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdi:opques:qef_918_25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bdigvit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.