Structural change, institutions and the dynamics of labor productivity in Europe

Riccardo Pariboni and Pasquale Tridico

Journal of Evolutionary Economics, 2020, vol. 30, issue 5, No 2, 1275-1300

Abstract: Abstract The objective of this paper is to explain the reasons behind the dynamics of labor productivity (LP) growth during a process of institutional and structural change. We show - by means of a theoretical discussion and an empirical analysis, conducted on a sample of 25 European countries for the period 1995–2016 - that four main channels contribute to explaining the evolution of LP. First, the speed of investment, which incorporates innovation and favors an increase of LP growth; second, the speed of Research and Development (R&D), which allows for the creation of new ideas and shows the “dynamism of a society”, having positive effects on LP; third, the deregulation of labor markets and the increase of temporary employment, both of which encourage labor-intensive strategies by firms, with low value-added and low productivity gains; fourth, the direction of structural change, which can take place toward services industries affected by “Baumol’s disease”.

Keywords: Labor productivity; R&D; Institutions; Labor flexibility (search for similar items in EconPapers)
JEL-codes: E24 H53 L16 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (21)

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DOI: 10.1007/s00191-019-00641-y

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