Competition, Productivity and Prices in the Euro Area Services Sector

141 Pages Posted: 24 Apr 2006

See all articles by Ad van Riet

Ad van Riet

United Nations University - Institute on Comparative Regional Integration Studies (UNU-CRIS)

Moreno Roma

European Central Bank (ECB)

Date Written: April 2006

Abstract

This paper analyses the degree of competition in the euro area services sector and its effects on labour productivity and relative prices in that sector over the period 1980-2003. The importance of the euro area services sector has significantly increased over time; it now accounts for around 70% of the euro area's total nominal value added and employment. Labour productivity growth across the euro area services industries appears to be characterised by a high degree of diversity and the level of services inflation is on average higher than aggregate inflation. Investigating several proxies of market competition for the non-financial business services, the paper finds that limited competition in services tends to hamper labour productivity growth in the services sector. Moreover, results tend to suggest that measures aimed at increasing services market competition may have a dampening impact on relative price changes in some services sectors and thus temporarily on aggregate inflation.

Suggested Citation

van Riet, Ad and Roma, Moreno, Competition, Productivity and Prices in the Euro Area Services Sector (April 2006). ECB Occasional Paper No. 44, Available at SSRN: https://ssrn.com/abstract=807418

Ad Van Riet (Contact Author)

United Nations University - Institute on Comparative Regional Integration Studies (UNU-CRIS) ( email )

Brugge
Belgium

Moreno Roma

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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