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Growth in Euro Area Labour Quality


  • Schwerdt, Guido
  • Turunen, Jarkko


Composition of the euro area workforce evolves over time and in response to changing labour market conditions. We construct an estimate of growth in euro area labour quality over the period 1983-2004 and show that labour quality has grown on average by 0.6% year-on-year over this time period. Labour quality growth was significantly higher in the early 1990s than in the 1980s. This strong increase was driven by an increase in the share of those with tertiary education and workers in prime age. Growth in labour quality moderated again towards the end of the 1990s, possibly reflecting the impact of robust employment growth resulting in the entry of workers with lower human capital. Labour quality growth has on average accounted for nearly one third of euro area labour productivity growth. The results point to a significant decline in the contribution of total factor productivity to euro area growth.

Suggested Citation

  • Schwerdt, Guido & Turunen, Jarkko, 2006. "Growth in Euro Area Labour Quality," CEPR Discussion Papers 5509, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5509

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    Cited by:

    1. Thomas Bolli & Mathias Zurlinden, 2012. "Measurement of labour quality growth caused by unobservable characteristics," Applied Economics, Taylor & Francis Journals, vol. 44(18), pages 2297-2308, June.
    2. Kieran McQuinn & Karl Whelan, 2008. "Prospects for Growth in the Euro Area," CESifo Economic Studies, CESifo, vol. 54(4), pages 642-680, December.
    3. Athanasoglou, Panayiotis P. & Georgiou, Evangelia A. & Staikouras, Christos C., 2009. "Assessing output and productivity growth in the banking industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1317-1340, November.
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    5. Backman, Mikaela, 2013. "Regional Variation of Returns to Education," Working Paper Series in Economics and Institutions of Innovation 300, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    6. Schwerdt, Guido & Turunen, Jarkko, 2010. "Labor quality growth in Germany," Economics Letters, Elsevier, vol. 108(3), pages 280-282, September.
    7. Aitor Lacuesta & Sergio Puente & Pilar Cuadrado, 2009. "Omitted variables in the measure of a labour quality index: the case of Spain," Working Papers 0835, Banco de España;Working Papers Homepage.
    8. Robalo Marques, Carlos & Dias, Daniel & Santos Silva, João M. C., 2006. "Measuring the importance of the uniform nonsynchronization hypothesis," Working Paper Series 606, European Central Bank.
    9. Mikaela Backman, 2014. "Returns to Education across the Urban-Rural Hierarchy," The Review of Regional Studies, Southern Regional Science Association, vol. 44(1), pages 33-59, Spring.
    10. Theo Eicher & Oliver Röhn, 2007. "Sources of the German Productivity Demise – Tracing the Effects of Industry-Level ICT Investment," CESifo Working Paper Series 1896, CESifo Group Munich.
    11. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2011. "The Importance Of Skill Measurement For Growth Accounting," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(2), pages 293-305, June.
    12. Guido Schwerdt & Jarkko Turunen, 2007. "Changes in Human Capital: Implications for Productivity Growth in the Euro Area," ifo Working Paper Series 53, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    13. Linehan, Suzanne & McQuinn, Kieran, 2008. "A Sectoral Analysis of the Average Work Week in Euro Area Countries," Quarterly Bulletin Articles, Central Bank of Ireland, pages 68-88, October.
    14. Rocío García Díaz & Daniel Prudencio, 2017. "A long-term employment index for Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 32(1), pages 133-165.
    15. Thomas Bolli & Mathias Zurlinden, 2009. "Measuring Growth of Labor Quality and the Quality-Adjusted Unemployment Rate in Switzerland," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 55(2), pages 121-145.
    16. Ángel Díaz-Chao & Pilar Ficapal-Cusí & Joan Torrent-Sellens, 2016. "Economic Crisis and Job Quality in Spain: A Multi-dimensional and Micro-data Empirical Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(2), pages 613-633, January.
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    More about this item


    growth accounting; human capital; labour quality; total factor productivity;

    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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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