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The café economy: structural transformation in Greece in the wake of austerity and “reforms”

Author

Listed:
  • Nikiforos, Michalis
  • Missos, Vlassis
  • Pierros, Christos
  • Rodousakis, Nikolaos

Abstract

This paper investigates the structural transformation of the Greek economy over the past fifteen years, focusing on the increasing dominance of the Accommodation and Food Service Activities (AFSA) sector in the aftermath of austerity and structural reforms. Despite promises of productivity gains through labor market and product market reforms, the Greek economy has experienced a sharp decline in labor productivity and a significant reallocation of employment towards low-productivity sectors, especially AFSA, reminiscent of a Lewis-type dual sector economy. Using a simple Panel-VAR model we find that declining aggregate demand and real wages were key drivers of this productivity collapse. Our findings support theories of technological change that emphasize output growth and the cost of labor as fundamental determinants of productivity growth.

Suggested Citation

  • Nikiforos, Michalis & Missos, Vlassis & Pierros, Christos & Rodousakis, Nikolaos, 2025. "The café economy: structural transformation in Greece in the wake of austerity and “reforms”," LSE Research Online Documents on Economics 137246, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:137246
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    File URL: https://researchonline.lse.ac.uk/id/eprint/137246/
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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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