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Technology catching-up and regulation in European regions

Francisco Javier Escribá-Pérez () and María José Murgui-García ()
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Francisco Javier Escribá-Pérez: Facultat dEconomia, Universitat de València
María José Murgui-García: Facultat dEconomia, Universitat de València

Journal of Productivity Analysis, 2018, vol. 49, issue 1, 95-109

Abstract: Abstract This paper analyses the effects of the intensity of regulations in the product and labour markets on the growth of total factor productivity (TFP) for 121 European regions. A technological catch-up model is estimated for the period 1995–2007. We use the spatial lag of X (SLX) model to capture possible spatial interactions across spatial units. Our empirical findings show that lower levels of regulation are associated with higher TFP growth. Lower barriers to entrepreneurship and lower bureaucratic costs have a positive effect on productivity growth. Corruption raises operational costs, distorts the allocation of resources and negatively affects innovation activities, thereby reducing TFP growth. Further liberalization in the labour market (in terms of hiring and firing regulation, working hours regulation and employment protection legislation) has a significant positive effect on the growth of TFP. In addition, both regional technological and regional human capital have a positive impact on the TFP growth in European regional economies.

Keywords: Productivity; Regulation; Human capital; Technology capital; Catch-up; European regions (search for similar items in EconPapers)
JEL-codes: O47 R11 R38 O52 C23 (search for similar items in EconPapers)
Date: 2018
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