Labor productivity and the standard of living in Austria

Andreas Reinstaller () and Michael Weichselbaumer

No 423, Reports from Büro des Produktivitätsrates

Abstract: This study analyzes the relationship between labor productivity growth and the standard of living in Austria from 2006 to 2019 using the statistical decomposition proposed by Oulton (2022). The standard of living is represented by the Equivalized Household Disposable Income (EHDI). The growth rate of EHDI is decomposed into contributions from productivity growth, labor market and demographic indicators, and price competitiveness. The analysis shows that the contribution of labor productivity growth to EHDI growth is the most important component in EHDI growth. However, with the slowdown in labor productivity growth between 2006 and 2019, its contribution has declined, and was therefore an important factor in the sluggish development of household income. Positive contributors to household income growth include the decline in household size and the increase in labor force participation. Negative contributors to EHDI growth include the decline in the household share of total income, the decline in hours worked per employee and the aging of the labor force. In particular, the aging of the labor force is an ongoing concern and its negative contribution to the development of living standards in Austria has increased over time. The results also suggest that the decline in the competitiveness of the Austrian economy vis-á-vis its main trading partners has had a negative impact on living standards

Keywords: Economic Growth; Aggregate Labor Productivity; Income (search for similar items in EconPapers)
JEL-codes: D31 E01 E24 E31 O47 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2023-06
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