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Tradability and productivity growth differentials across EU Member States

Klaus Friesenbichler () and Christian Glocker

Structural Change and Economic Dynamics, 2019, vol. 50, issue C, 1-13

Abstract: We apply the tradable-nontradable framework (T-NT) to evaluate the lack of convergence in labor productivity among EU Member States. Our results show that increases in overall productivity are primarily due to the tradable and not the nontradable sectors of production. The low productivity growth in peripheral EU countries before the crisis was accompanied by a sharp increase in the production of nontradables (i.e. nontradable goods and services) relative to other EU countries. We identify differences in the legal systems and the quality of public institutions, among others, as factors relevant for explaining the observed productivity growth differentials. Our findings have implications for the European Commission’s macroeconomic imbalance procedures since the T-NT approach allows identifying patterns of real divergence on a disaggregated level.

Keywords: Tradability; Labor productivity; Growth; Institutions; Structural change (search for similar items in EconPapers)
JEL-codes: E01 E02 E60 O43 O47 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Tradability and Productivity Growth Differentials Across EU Member States (2018) Downloads
Working Paper: Tradability and productivity growth differentials across EU member states (2017) Downloads
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