Structural Breaks in Labor Productivity Growth: The United States vs. the European Union
Juan Francisco Jimeno-Serrano
Foundation for Applied Economic Research (FEDEA); Universidad de Alcala; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
Banco de España
Bank of Spain
October 6, 2006
Banco de Espana Research Paper No. WP-0625
There is a stark contrast between the recent evolution of labor productivity (and TFP) in the US and EU countries. In the US it accelerated around the mid-1990s and there is evidence of reversion to a high-growth regime. In some EU countries, while employment-population ratios started to rise after a period of stagnant employment, labor productivity (and TFP) decelerated.
In this paper we apply univariate and multivariate methods, that have been used to detect structural breaks in productivity growth in the US economy, to EU data to confirm the existence of a significant permanent shift to lower productivity growth in some European countries around the mid-1990s. We find a structural break in mean labour productivity growth in the US around the mid-1990s (towards higher growth), in Continental Europe around the early 1990s (towards lower growth) and no evidence of structural breaks in the UK.
Number of Pages in PDF File: 43
Keywords: Structural Breaks, Labor productivity, Markov Switching Models
JEL Classification: C22, O47working papers series
Date posted: October 7, 2006
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