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Sectoral Explanations of Employment in Europe: The Role of Services

  • D'Agostino, Antonello


    (Central Bank and Financial Service Authority of Ireland)

  • Serafini, Roberta


    (European Central Bank)

  • Ward-Warmedinger, Melanie E.


    (European Central Bank)

This paper investigates the determinants of the service sector employment share in the EU-15, for the aggregate service sector, four sub-sectors and twelve service sector branches. Recently, both Europe and the US have experienced an increase in the share of service-related jobs in total employment. Although converging in all European countries, a significant gap in the share of service jobs in Europe relative to the US persists. Understanding the main factors behind this gap is key to achieving higher employment levels in Europe. This paper focuses on the role of barriers in the EU-15 which may have hindered its ability to absorb labour supply and therefore to adjust efficiently to the sectoral reallocation of labour. We find that a crucial role in this process has been played by the institutional framework affecting flexibility in the labour market and by the mismatch between workers’ skills and job vacancies.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2257.

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Length: 56 pages
Date of creation: Aug 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2257
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