Tradability and Productivity Growth Differentials Across EU Member States

Klaus Friesenbichler and Christian Glocker

No 547, WIFO Working Papers from WIFO

Abstract: This study examines the lack of convergence among EU countries from a structural perspective. We apply the tradable-non-tradable framework (T-NT) to evaluate the heterogeneity in labour productivity before and after the great recession. We find that, across all countries, non-tradables were less relevant for aggregate productivity. The low productivity growth in peripheral EU countries was accompanied by a specific structural change pattern: there was a sharp production increase of non-tradables before the crisis relative to other EU countries. For most peripheral countries concerns about unfavourable sector structures remain, implying a continuation of unsustainable growth patterns. This has implications for the European Commission's macroeconomic imbalance procedures, since it allows identifying patterns of real divergence on a disaggregated level. Finally, we identify a link between sectoral growth asymmetries and the quality of domestic governance institutions. Especially differences in the legal system help to explain the observed productivity growth differentials.

Keywords: EU; Growth; Imbalance; Institutions; Labour Productivity; Tradability (search for similar items in EconPapers)
Pages: 32 pages
Date: 2017-12
New Economics Papers: this item is included in nep-eec, nep-eff and nep-mac
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Tradability and productivity growth differentials across EU Member States (2019)
Working Paper: Tradability and productivity growth differentials across EU member states (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2017:i:547

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