How to close the productivity gap between the US and Europe: A quantitative assessment using a semi-endogenous growth model

Werner Roeger, Janos Varga and Jan in 't Veld

No 399, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: This paper uses a semi-endogenous growth model to identify possible sources for three interrelated stylised differences between the EU and the US, namely a higher level of productivity and knowledge investment and larger skill premia in the US compared to the EU. The model allows us to explain these differences in terms of differences in subsidies to R and D, mark ups, administrative entry barriers and financial frictions.The paper provides a ranking about the relative importance of these factors. Goods market competition and both administrative and financial entry barriers are the most important explanatory factors for lower productivity in the EU, while entry barriers explain the bulk of the knowledge investment gap and high skilled wage premia.

Keywords: productivity; differences; endogenous; growth; R; and; D; market; structure; skill; composition; dynamic; general; equilibrium; modelling; Economic; P; how; to; close; the; productivity; gap; between; the; US; a; quantitative; assessment; using; a; semi-endogenou; Varga; Roeger; in; 't; Veld; European; Economy.; Economic; Papers (search for similar items in EconPapers)
JEL-codes: C51 E21 E22 E52 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2010-01
New Economics Papers: this item is included in nep-eec, nep-eff, nep-fdg and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:ecopap:0399

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