Tertiarisation of the French Economy and the slowdown in labor productivity between 1978 and 2008

In France, as in many industrialized countries, labor productivity experienced a slowdown over the past three decades: labor productivity per capita increased by 2.6% per year from 1979 to 1989, by 1.9% from 1990 to 1999 and by 1.0% per year from 2000 to 2008. Meanwhile, tertiarisation went on. Since 1978, 150,000 jobs were created on average each year in the services sector, while 60,000 were destroyed in manufacturing. The service sector is often presented as one major factor behind the slowdown in productivity. We show however that this is not the main driving factor. According to our decomposition, if the share of each sector in the total employment had remained the same from 1978 to 2008, annual average labor productivity gains would have been at a level of 2.0%. Instead, they were actually at 1.9%, a level only slightly lower. The slowdown is in fact driven by the evolution within the major sectors (agriculture, market services, construction, and to a lesser extent, manufacturing) and their sub-branches, especially between the 1990s and 2000s. Annual average productivity gains were reduced by 3.7 percentage points in agriculture between the two decades, by 0.8 percentage points in manufacturing, by 0.3 percentage points in services and by 2.0 points in construction.