Europe’s productivity growth – not as bad as it seems

Author (Corporate)
Series Title
Series Details Vol.33, No.20, 8.11.04, p321
Publication Date 08/11/2004
ISSN 0047-083X
Content Type

Slow productivity growth has plagued the euro area since the mid-1990s. That is particularly striking in view of the large productivity gains in the United States during the same period. This paper shows that the deceleration in labour productivity in the euro area was caused by structural changes in wage formation that have affected the relative price of labour, increased the labour intensity of growth and, thus, reduced the rate of capital deepening. Technological shocks seem to have played a minor role in explaining slower productivity growth in the euro area. In addition, a surge in capital deepening and, mainly, TFP growth in key service industries in the United States explain a large part of the productivity growth gap between the two regions in the second half of the 1990s.

Source Link Link to Main Source http://www.imf.org/external/pubs/ft/survey/2004/110804.pdf
Related Links
IMF: Working Paper, No.200, 2004: Why is Productivity Growth in the Euro Area So Sluggish? http://www.imf.org/external/pubs/ft/wp/2004/wp04200.pdf

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