Per Capita Income, Productivity and Labour Market Participation: Recent Developments in Greece

Abstract

The gap separating Greece’s per capita income from that of the EU-15 is broken down into labour productivity and labour utilization gaps. The high rates of labour productivity growth in Greece in the last decade, attributable mainly to technological progress, have not increased the level of labour productivity sufficiently. As a result, productivity is still at a much lower level than in the EU-15 and this is the main explanation for the gap in per capita income. Possible explanations for this performance are sought in the overall business environment, the lack of competition in key sectors of economic activity, the smaller size of Greek firms, the delay in adopting new technologies and the shortcomings of the educational system. The lower rate of participation in the labour market also contributes, though to a lesser extent, to the gap in per capita income. The lower labour force participation reflects the lower rate at which women participate in the labour market and the late entry of youth into the labour market.

Keywords: labour market

JEL Classification: D24, J21, O47