Tradability and productivity growth differentials across EU member states

Klaus Friesenbichler and Christian Glocker

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the lack of convergence among EU Member States from a structural perspective. We apply the tradable-nontradable framework (T-NT) to evaluate the heterogeneity in labour productivity before and after the great recession. We find that, across all countries, nontradables were less relevant for aggregate productivity. The low productivity growth in peripheral EU countries was accompanied by a specific structural change pattern: There was a sharp production increase of nontradables before the crisis relative to other EU countries. For most peripheral countries concerns about unfavourable sector structures remain, implying a continuation of unsustainable growth patterns. This has implications for the European Commission’s macroeconomic imbalance procedures, since it allows identifying patterns of real divergence on a disaggregated level. Finally, we identify a link between sectoral growth asymmetries and the quality of domestic governance institutions. Especially differences in the legal system help to explain the observed productivity growth differentials.

Keywords: Tradability; Labour productivity; Growth; Institutions; EU; Imbalances (search for similar items in EconPapers)
JEL-codes: E1 E2 E60 O43 O47 (search for similar items in EconPapers)
Date: 2017-12-24
New Economics Papers: this item is included in nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Tradability and productivity growth differentials across EU Member States (2019)
Working Paper: Tradability and Productivity Growth Differentials Across EU Member States (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83382

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