EconPapers    
Economics at your fingertips  
 

The IT Revolution and Southern Europe's Two Lost Decades

Fabiano Schivardi () and Tom Schmitz

No 12843, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Since the middle of the 1990s, productivity growth in Southern Europe has been substantially lower than in other developed countries. In this paper, we argue that this divergence was partly caused by inefficient management practices, which limited Southern Europe's gains from the IT Revolution. To quantify this effect, we build a multi-country general equilibrium model with heterogeneous firms and workers. In our model, the IT Revolution generates divergence for three reasons. First, inefficient management limits Southern firms' productivity gains from IT adoption. Second, IT increases the aggregate importance of management, making its inefficiencies more salient. Third, IT-driven wage increases in other countries stimulate Southern high-skill emigration. We calibrate our model using firm-level evidence, and show that it can account for 28% of Italy's, 39% of Spain's and 67% of Portugal's productivity divergence with respect to Germany between 1995 to 2008.

Keywords: Divergence; IT; Management; Southern Europe; Technology adoption; TFP (search for similar items in EconPapers)
JEL-codes: L23 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-pay
Date: 2018-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12843 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: The IT Revolution and Southern Europe’s Two Lost Decades (2018) Downloads
Working Paper: The IT Revolution and Southern Europe's Two Lost Decades (2018) Downloads
Working Paper: The IT Revolution and Southern Europe’s Two Lost Decades (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12843

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=12843

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2019-04-11
Handle: RePEc:cpr:ceprdp:12843