Labour Productivity and Technology Gap in European Regions: A Non-Parametric Approach
London School of Economics & Political Science (LSE); Italian National Research Council (CNR-ISSIRFA); University of London - Birkbeck College
University of Queensland - School of Economics
April 14, 2012
The endogenous approach to regional development policy has become central over the last decade. By employing the conditional frontier approach, this paper investigates the relative contribution to labour productivity growth of: (1) capital accumulation, (2) exogenous technical change and efficiency, and (3) endogenous technological capabilities – i.e. innovation capability and human capital. We find overall convergence in labour productivity growth driven by capital accumulation and exogenous technical change, in 211 European regions in 18 countries over the period 1995-2007. Differences in terms of relative contribution arise concerning advanced regions vis-à-vis backward regions. As for the latter, productivity growth is mainly driven by capital accumulation, while the lack of convergence in terms of endogenous technological capabilities casts some doubts on the sustainability of the convergence process and suggests some implications for the European Cohesion policy.
Keywords: labour productivity growth, technology gap, data envelopment analysis, EU Cohesion policy
JEL Classification: O3, R11, C14
Date posted: April 15, 2012
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