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Structural Change, Aggregate Demand And The Decline Of Labour Productivity: A Comparative Perspective

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  • Pasquale Tridico
  • Riccardo Pariboni

Abstract

Over the last three decades, many advanced economies have experienced significant changes in their productive structures, with a decline in the share of workers in manufacture and a transition towards the service sector. This structural change can be considered as one of the main causes behind the poor performance of aggregate labour productivity. Moreover, these changes have been associated with a process of reforms in the labour market - i.e. an increase in labour flexibility and a reduction in employees’ protections - and a compression of the wage share. Our hypothesis is that these institutional and economic processes can also be harmful to labour productivity. We submit our hypotheses to empirical scrutiny. The results are as follows: the share of employment in manufacture is positively related to labour productivity. On the other hand, the share of employment in several service industries and labour flexibility negatively affect it.

Suggested Citation

  • Pasquale Tridico & Riccardo Pariboni, 2017. "Structural Change, Aggregate Demand And The Decline Of Labour Productivity: A Comparative Perspective," Departmental Working Papers of Economics - University 'Roma Tre' 0221, Department of Economics - University Roma Tre.
    • Handle: RePEc:rtr:wpaper:0221
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    Cited by:

    1. Matteo Deleidi & Walter Paternesi Meloni & Antonella Stirati, 2020. "Tertiarization, productivity and aggregate demand: evidence-based policies for European countries," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1429-1465, November.
    2. Matteo Deleidi & Walter Paternesi Meloni & Antonella Stirati, 2018. "Structural change, labour productivity and the Kaldor-Verdoorn law: evidence from European countries," Departmental Working Papers of Economics - University 'Roma Tre' 0239, Department of Economics - University Roma Tre.
    3. Gaetano Perone, 2018. "Produttività del lavoro, dinamica salariale e squilibri commerciali nei Paesi dell'Eurozona: un'analisi empirica," Economia & lavoro, Carocci editore, issue 3, pages 61-98.
    4. Riccardo Pariboni & Pasquale Tridico, 2020. "Structural change, institutions and the dynamics of labor productivity in Europe," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1275-1300, November.

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    More about this item

    Keywords

    Structural change; labour productivity; aggregate demand; welfare models;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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