New technologies and productivity growth in the euro area

This paper provides an overview of the available evidence on the importance of information and communication technologies (ICT) for developments in average labour productivity (ALP) growth in the euro area. The contribution of ICT to ALP growth is found to have increased both in terms of production and investment over the 1990s (up to 2001). However, there is no evidence of significant positive spillover effects from the use of ICT on ALP growth. This implies that there is no reason to believe that potential output growth in the euro area has increased significantly in recent years on account of new technologies. Comparing developments in the euro area and the United States, it appears, however, that ICT capital cannot account for much of the difference in ALP developments over the 1990s. This suggests that cyclical developments and, in particular, the structure of the economy are more important for explaining the difference in performance.First version received: March 2002/Final version received: May 2003We thank Bart van Ark, Neale Kennedy, Gerard Korteweg, Ad van Riet, Marcel Timmer, two anonymous referees and participants at the 17th Congress of the European Economic Association, Venice August 2002 for their comments. All errors and omissions remain ours, of course. We thank Erikos Velissaratos for his help in acquiring data on investment in ICT and Colin Webb for providing us with the OECD STAN database. This paper represents the views of the authors and does not necessarily reflect the views of the European Central Bank, the European Commission or their staff.     

Productivity Trends and the Sterling Real Exchange Rates*

This paper provides favorable econometric evidence for a productivity‐based model of the pound/euro real exchange rate. We find that a 1% increase in UK productivity is consistent with a 3.5% real depreciation of sterling. Likewise, a 1% increase in euro area productivity is compatible with a 5.16% real appreciation of sterling. The asymmetric response of UK and foreign productivity shocks corresponds well with our model if UK labor supply is more elastic than euro area labor supply. Estimates of equilibrium exchange rates suggest that sterling was not overvalued at its 2004Q3 level vis‐à‐vis the euro.     

ICT AND EUROPE's PRODUCTIVITY PERFORMANCE: INDUSTRY-LEVEL GROWTH ACCOUNT COMPARISONS WITH THE UNITED STATES

In this paper we present a new industry-level database to analyze sources of growth in four major European countries: France, Germany, Netherlands and the United Kingdom (EU-4), in comparison with the United States for the period 1979–2000. Aggregate labor productivity growth is decomposed into industry-level contributions of labor quality, ICT and non-ICT capital deepening and TFP. A small set of service industries is mainly responsible for the acceleration in ICT capital deepening in both regions, but their contribution to growth is lower in the EU-4 than in the U.S. TFP in these ICT-intensive services accelerated in the U.S. in the 1990s, but not in Europe. In addition, widespread deceleration in non-ICT capital deepening in the EU-4 has led to a European labor productivity slowdown.     

Shifts and twists in the relative productivity of skilled labor

Skill-biased technical change is usually interpreted in terms of the efficiency parameters of skilled and unskilled labor. This implies that the relative productivity of skilled workers changes proportionally in all tasks. In contrast, we argue that technical changes also affect the curvature of the distribution of relative productivity. Building on Rosen (1978) [Rosen, S., 1978. Substitution and the division of labor. Economica 45, 235–250] tasks assignment model, this implies that not only the efficiency parameters of skilled and unskilled workers change, but also the elasticity of substitution between skill types of labor. Using data for the United States between 1963 and 2002, we find significant empirical support for a decrease in the elasticity of substitution at the end of the 1970s followed by an increase at the beginning of the 1990s. This pattern of the elasticity of substitution has contributed to the labor productivity slowdown in the mid-1970s through the 1980s and to a speedup in the 1990s.     

Information and Communication Technology (ICT) and Singapore’s economic growth

Singapore’s remarkable success in economic development has been strongly associated with the country’s vigorous efforts to embrace the Information and Communication Technology (ICT) revolution to promote economic growth. This study provides a comprehensive investigation of the contributions of ICT to Singapore’s economic growth during the 1990–2008 period. It documents three key findings. First, there is a strong positive association between the intensity of ICT use and value-added and labor productivity growth at the sector level. Second, ICT investment contributed approximately 1 percentage point to Singapore’s GDP during 1990–2008, and its role in driving economic growth has become increasingly important over time. Third, the contribution of the ICT manufacturing sector to Singapore’s growth was notable, but it was on the decline and faced difficult restructuring challenges. This paper also provides valuable policy lessons and strategic insights for governments in both developed and developing countries that aspire to embrace ICT to promote economic growth.     

Did the pattern of aggregate employment growth change in the euro area in the late 1990s?

This paper examines whether the pattern of growth in euro area employment seen in the period 1997 to 2001 differs from that recorded in the past and what could be the reasons. First, a standard employment equation is estimated for the euro area as a whole. This shows that the lagged impact of both output growth and real labour cost growth, together with a productivity trend and employment ‘inertia’, can account for most of the employment developments between 1970 and the early 1990s. Conversely, these traditional determinants can only explain part of the employment development seen in recent years (1997 to 2001). Second, the paper shows sound evidence of a structural break in the aggregate employment equation in the late 1990s. Third, the paper provides some tentative explanations for this change in aggregate employment developments, using in particular country panels of institutional variables and of active labour market policies but also cross-sectional analyses. Among the relevant factors likely to have contributed to rising aggregate employment in recent years are changes in the sectoral composition of euro area employment, the strong development of part-time jobs, lower labour tax rates and possibly less stringent employment protection legislation and greater subsidies to private employment.     

ICT and Growth: The Role of Rates of Return and Capital Prices

We revisit the widely discussed contribution of investment in ICT to economic growth, focusing on differences in productivity and quality of ICT across countries and time. In a growth accounting approach, we look at the way rates of return and rates of asset price decline measure these aspects. Conducting a sensitivity analysis with data from the EU KLEMS database for the years 1990–2007, we introduce a constant rate of return and a constant rate of ICT price decline. Both alternative measurements somewhat downplay the role investment played relative to growth in multifactor productivity in the U.K. and the U.S. during 1995–2000. Moreover, we show that more than half of the ICT contribution to labor productivity growth results from changes in capital quality and composition rather than from quantity.     

Employment and Productivity Growth in Europe and North America: The Impact of Labor Market Institutions

In this paper, we examine long-run employment and productivity growth in the major economies of North America and Europe from 1960 to the early 1990s. We develop a model in which output growth is determined by the growth of aggregate demand, and the relative contributions of employment and productivity growth to the growth of output depend on country specific labor market institutions. We find that institutions that promote collective bargaining, employment security and social protection have roughly equal and opposite effects on employment growth (negative) and productivity growth (positive), giving rise to an inverse relationship between these variables. The welfare implications of this finding are that labor market deregulation could result in more work and greater inequality and insecurity for workers, without significantly increasing the rate of economic growth.     

OMITTED VARIABLES IN THE MEASUREMENT OF A LABOR QUALITY INDEX: THE CASE OF SPAIN

Traditional measures of labor quality might have the shortcoming of missing some features of the very important increase in labor utilization within European countries. In particular, we explore the case of Spain. Despite showing one of the most important increases in labor quality in the EU according to standard methods, it also presents a negative TFP growth. The paper shows the importance of considering—on top of observed changes in the composition of the labor force by gender, age, education, tenure, and nationality—changes in both average and relative productivities of those abovementioned socio‐demographic groups over time. We first use a time varying weight index in order to capture the decrease in relative productivities across characteristics. Once this issue is considered the estimated growth of labor quality decreases notably and the index becomes flat between 2002 and 2006. We relate this slowdown to the increasing over‐education of the Spanish workforce in the recent past. We then incorporate a selection model into the labor force. We argue that in the recent past there has been a massive entry of workers with below average unobserved abilities, generating a decrease in quality of labor. Indeed labor quality slightly decreased from 1995 onwards (always increasing without the selection model).     

NEW ESTIMATES OF THE U.S. ECONOMY'S POTENTIAL GROWTH RATE

Using an Okun's law framework, the analysis here estimates potential growth for the 1990s as measured by both fixed- and chain-weighted GDP. It then decomposes estimated potential growth rates into labor productivity growth (LPG) and labor input growth (LIG) using a regression analysis to separate secular from cyclical changes. It compares estimates of potential output and trend productivity growth for the 1990s with estimates from earlier periods. Results indicate that eliminating the substitution bias associated with fixed-weight measures of real GDP raises estimated potential GDP growth in the 1980s but lowers it in the 1990s. A slowdown in labor force growth, with little or no change in long-term productivity growth, largely accounts for the implied slowdown in potential growth.     

从全要素生产率增长看经济增长方式的变化

中国全要素生产率增长的变化主要经历了三个阶段.20世纪80年代的波动增长期,90年代的稳定发展期和2000年以后的下降恢复期.就各要素对经济增长的贡献来说,资本投入的贡献是推动中国经济增长的主要动力,平均占到46.90%;劳动投入的贡献较为稳定,但水平相对较低,只有17.36%;全要素生产率的贡献平均维持在35.75%的水平.因此,从整体来看,中国经济增长的方式仍然没有摆脱效率较低的粗放型增长,但其趋势是向着集约型增长发展.     

Market institutions,labor market dynamics,and productivity in Argentina during the 1990s

This paper addresses the effects of policy shocks and structural reforms on the dynamic behavior of manufacturing job flows and productivity in Argentina during the 1990s, and the contribution of job reallocation to productivity. The main findings are: (a) shocks to labor taxes have allocative effects, while financial shocks have aggregate effects; (b) import tariffs appear to protect obsolete jobs; (c) sectoral differences in labor intensity, openness, financial dependence and workers’ strength shape the responses to shocks; (d) intra‐ and inter‐sectoral reallocations contribute positively to productivity; and (e) trade liberalization and labor market flexibilization favor reallocation and creative destruction.     

Unwrapping some euro area growth puzzles: Factor substitution, productivity and unemployment

In this paper, we estimate a long run supply-side system incorporating a CES production function with time-varying factor-augmenting technical progress for the euro area over the period 1970–2005. We find that the elasticity of substitution lies below unity at 0.7, that labor-augmenting technical progress is dominant in the long run while capital-augmenting technical progress plays an important role in the interim period. Importantly, we also find evidence of a structural break in the pattern of biased technical progress towards the end of the 1990s. Our results help to solve two puzzles in Europe’s recent growth experience which differ markedly from the US experience. The first is related to the effects of the IT boom in the 1990s on productivity growth in Europe. The second puzzle concerns the changes in the “Okun’s law” relationship, linking growth to the reduction of unemployment, which are observable in Europe since the late 1990s.     

Labour force ageing and productivity performance in Canada

Abstract.  This paper studies the direct impact of labour force ageing on productivity growth in 10 Canadian provinces over the period 1981–2001, with an outlook to 2046. It shows that older workers are, on average, less productive than younger workers and that labour force ageing has a modest negative direct impact on productivity growth in Canada. The impact has increased since the middle of the 1990s, will peak in 2001–11, and tail off afterwards. During the peak period, productivity growth in Canada will be reduced by 0.13 to 0.23 percentage points per year, with Newfoundland being hit the hardest. JEL classification: J21, O47     

中国城市化进程中农民工对经济产出的贡献与收益分享

在城市化进程中,农民工群体已经成为中国城市第二、三产业劳动力的重要组成部分。文章充分考虑了农民工与城镇职工在劳动生产率和劳动强度上的差异,运用柯布-道格拉斯生产函数分析1991～2010年农民工群体对中国非农经济产出的贡献率及其收入水平,得出的基本结论是:农民工对我国非农经济产出的贡献率平均为16.37%,其对中国国民经济增长做出了重要贡献,相应地,农民工群体的收入水平相对于其对非农经济产出的贡献比城镇职工偏低。城镇职工对非农经济产出的贡献是农民工的1.63倍,然而城镇职工收入平均是农民工收入的3.43倍。文章的研究结论为中国"十二五"期间新一轮扩大内需政策提供了新的思路。     

Vintage Effects In Human Capital: Europe Versus The United States

The standard assumption in growth accounting is that an hour worked by a worker of given type delivers a constant quantity of labor services over time. This assumption may be violated due to vintage effects, which were shown to be important in the United States since the early 1980s, leading to an underestimation of the growth of labor input (Bowlus anA1d Robinson, 2012). We apply their method for identifying vintage effects to a comparison between the United States and six European countries. We find that vintage effects led to increases of labor services per hour worked by high-skilled workers in the United States and United Kingdom and decreases in Continental European countries between 1995 and 2005. Rather than a productivity growth advantage of the US and UK, the primary difference with Continental European countries was human capital vintage effects instead.     

Productivity Growth and Input Demand: The Effect of Learning by Doing in a Gold Mining Firm in a Developing Economy

This paper analyzes the effect of learning by doing (LBD) on the firm’s productivity growth and its input demand decisions. The results indicate that LBD is an important determinant of the firm’s productivity growth. The contribution of LBD to the firm’s productivity growth is about 5.6%. Another observation is that LBD has a decreasing effect on the firm’s cost of production – a finding which is consistent with the results of many studies. Also, an increase in LBD measured by cumulative production increases the firm’s demand for capital, and decreases the firm’s demand for labor. Lastly, LBD has a significant effect on the firm’s elasticity of scale. A fundamental message derived from the study is the confirmation that the firms should invest in more large capital equipment, embark on new processing techniques, and create an environment that is conducive to on-the-job learning.     

Structural transformation in Egypt,Morocco and Tunisia: Patterns,drivers and constraints

This study analyses structural transformation in three Middle East and North Africa (MENA) countries: Tunisia, Morocco and Egypt over a large time period (1960–2010). We examine labour productivity evolution and structural change contribution to productivity growth over different sub‐periods. We analyze the contribution of different economic sectors to aggregate structural change in the three countries. An econometric analysis is also performed to identify the main factors underlying the intensity and the pattern of structural change. Results suggest that the three countries initiated and achieved some progress in structural transformation over the 1970s, 1980s and early 1990s. However, this process has stagnated at low‐income levels and has remained unfinished. Deindustrialization occurred at an early stage of development in the three countries, in contrast to that noticed in developed and emergent countries. The results of the econometric analysis suggest a significant and positive association between investment and structural change as capital accumulation increases the future productive capacity and triggers reallocative efficiency. The human capital quality and availability has a positive and significant impact on structural change. Trade openness is also expected to boost structural transformations. However, labour market rigidity hampers structural transformation.     

影响欧元区经济增长的因素分析

除2001年以外,欧元区的经济增长水平一直低于世界发达经济体。根本原因是其技术进步相对落后,劳动力市场僵化,失业率居高不下。以价格稳定为首要目标的单一货币政策,有利于其宏观经济稳定,但在一定程度上制约了经济的快速增长;共同财政纪律,有利于其经济顺利推进,但是削弱了各成员国运用财政政策抵御国内经济周期性振荡以及外部经济失衡的能力,尤其在经济衰退时期限制了各国利用扩张性财政政策刺激经济的手段。     

Productivity Growth, Participation and Communication

The issue of communication between workers and firms has become important in recent political and economic policy debates. The most obvious example of this is the debate over whether the UK should adopt the Social Chapter of the Maastricht Treaty, which would make it mandatory for many firms to consult and communicate with their workforce. Another example is the debate over whether workers should be regarded as 'stakeholders'. In this paper we use establishment level data from the 1990 WERS survey to show that communication is associated with higher productivity growth. However, the strongest effects come from informal contact rather than through more formal bodies such as works councils. We argue that our results are consistent with a causal relationship where communication leads to higher productivity growth and further argue that the evidence is against the alternative interpretation of reverse causation. Our results have interesting policy implications: initiatives that increase communication can increase productivity growth, but will only be effective if they increase the amount of informal communication.