Labour Productivity in European Non-Financial Corporations: The Roles of Country, Sector, and Size

Fábio Albuquerque (), Joaquim Ferrão and Paula Gomes dos Santos
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Fábio Albuquerque: Lisbon Accounting and Business School (ISCAL), Instituto Politécnico de Lisboa, Av. Miguel Bombarda 20, 1069-035 Lisboa, Portugal
Joaquim Ferrão: Lisbon Accounting and Business School (ISCAL), Instituto Politécnico de Lisboa, Av. Miguel Bombarda 20, 1069-035 Lisboa, Portugal
Paula Gomes dos Santos: Lisbon Accounting and Business School (ISCAL), Instituto Politécnico de Lisboa, Av. Miguel Bombarda 20, 1069-035 Lisboa, Portugal

JRFM, 2025, vol. 18, issue 11, 1-24

Abstract: This study aims to investigate the determinants of labour productivity across European non-financial entities using aggregated data from the Bank for the Accounts of Companies Harmonized (BACH) database. Focusing on six European Union countries (Belgium, France, Italy, Portugal, Poland, and Spain). Annual information from 2010 to 2023 is used (the last available year), including three size classes (small, medium-sized and larger entities) per division (two-digit code) by year and by country, totalling 14,188 observations. The combination of sectors and class sizes varies from 191 to 208 by country. It uses gross value added per employee as a proxy for labour productivity. Using a fixed-effects estimator and panel data regression techniques, the analysis reveals that labour productivity explanatory factors, particularly firm size, profitability, financialisation, leverage, and tangibility, have heterogeneous and sometimes contradictory effects across countries, sectors, and size classes. Larger firms generally tend to have higher levels of labour productivity, although this feature is not consistent among countries. Size and profitability more consistently exert a strong positive influence, whereas financialisation and leverage typically show negative or nonlinear effects. The results highlight the structural diversity of the European corporate landscape and challenge the adequacy of one-size-fits-all policy measures, contributing to the literature on productivity and offering further insights to policymakers by integrating cross-sectional, sectoral, and size-specific perspectives on labour efficiency within the EU context.

Keywords: aggregate data; European countries; labour productivity; size effects; sectoral effects (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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