Productivity Growth and the Labor Market

A.B.T.M. van Schaik, T.C.M.J. van de Klundert

Research output: Working paperDiscussion paperOther research output

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Abstract

The productivity slowdown in Europe since the mid-1990s is a reason for concern. Labour market rigidity, hampering innovation, may be a cause of the slowdown. In the paper this argument is placed in a broader perspective. Labour force participation is an important factor in explaining differences in productivity and welfare over time and across regions as can be illustrated by comparing the US and the EU-15. Moreover, technological change is not entirely exogenous. Dynamic increasing returns as introduced by Kaldor and Verdoorn may boost productivity. For countries other than the US catching up appears to be of importance. The question is then to what extent labour market institutions account for productivity growth. Regression analysis on a panel of 21 OECD countries covering the period 1960-2005 reveals that employment protection is relevant but that the impact is qualitatively different before and after 1980. The reason is that in the first sub-period technological change is driven in most countries by imitation, whereas in the second sub-period innovation becomes the predominant factor everywhere.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages22
Volume2010-06
Publication statusPublished - 2010

Publication series

NameCentER Discussion Paper
Volume2010-06

Fingerprint

Productivity
Technological change
Innovation
Factors
Productivity growth
Labour market
Labor market rigidities
Imitation
Kaldor
OECD countries
Labor force participation
Productivity slowdown
Regression analysis
Catching-up
Employment protection
Labor market institutions
Increasing returns

Keywords

  • Labour productivity growth
  • catching-up
  • labour force participation
  • employment protection

Cite this

van Schaik, A. B. T. M., & van de Klundert, T. C. M. J. (2010). Productivity Growth and the Labor Market. (CentER Discussion Paper; Vol. 2010-06). Tilburg: Macroeconomics.
van Schaik, A.B.T.M. ; van de Klundert, T.C.M.J. / Productivity Growth and the Labor Market. Tilburg : Macroeconomics, 2010. (CentER Discussion Paper).
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van Schaik, ABTM & van de Klundert, TCMJ 2010 'Productivity Growth and the Labor Market' CentER Discussion Paper, vol. 2010-06, Macroeconomics, Tilburg.

Productivity Growth and the Labor Market. / van Schaik, A.B.T.M.; van de Klundert, T.C.M.J.

Tilburg : Macroeconomics, 2010. (CentER Discussion Paper; Vol. 2010-06).

Research output: Working paperDiscussion paperOther research output

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T1 - Productivity Growth and the Labor Market

AU - van Schaik, A.B.T.M.

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N1 - Subsequently published in Applied Economics (2011) Pagination: 22

PY - 2010

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AB - The productivity slowdown in Europe since the mid-1990s is a reason for concern. Labour market rigidity, hampering innovation, may be a cause of the slowdown. In the paper this argument is placed in a broader perspective. Labour force participation is an important factor in explaining differences in productivity and welfare over time and across regions as can be illustrated by comparing the US and the EU-15. Moreover, technological change is not entirely exogenous. Dynamic increasing returns as introduced by Kaldor and Verdoorn may boost productivity. For countries other than the US catching up appears to be of importance. The question is then to what extent labour market institutions account for productivity growth. Regression analysis on a panel of 21 OECD countries covering the period 1960-2005 reveals that employment protection is relevant but that the impact is qualitatively different before and after 1980. The reason is that in the first sub-period technological change is driven in most countries by imitation, whereas in the second sub-period innovation becomes the predominant factor everywhere.

KW - Labour productivity growth

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KW - labour force participation

KW - employment protection

M3 - Discussion paper

VL - 2010-06

T3 - CentER Discussion Paper

BT - Productivity Growth and the Labor Market

PB - Macroeconomics

CY - Tilburg

ER -

van Schaik ABTM, van de Klundert TCMJ. Productivity Growth and the Labor Market. Tilburg: Macroeconomics. 2010. (CentER Discussion Paper).