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1 Renaud Bourlès (Université de la Méditerranée) Gilbert Cette (Banque de France and Université de la Méditerranée) Trends in structural productivity levels.

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Presentation on theme: "1 Renaud Bourlès (Université de la Méditerranée) Gilbert Cette (Banque de France and Université de la Méditerranée) Trends in structural productivity levels."— Presentation transcript:

1 1 Renaud Bourlès (Université de la Méditerranée) Gilbert Cette (Banque de France and Université de la Méditerranée) Trends in structural productivity levels in the major industrialized countries

2 2 Hourly labour productivity % of the US level * Average annual hours worked In hours per worker Employment rate Canada76.1173672.5 France103.1152062.4 Germany91.0144365.5 Ireland101.8164265.5 Italy78.4158557.4 Japan70.2178968.7 Netherlands95.4135772.0 Norway122.4136475.6 Spain78.9174462.0 United Kingdom85.5166872.7 United States100182471.2 Hourly labour productivity, hours worked and employment rate in 2004 sources : OECD ; * PPP 2000 1. Introduction (1)

3 3 Thus estimating returns to hours worked and employment rate allows us to calculate structural hourly productivity : –for the US : productivity level assuming hours worked and the employment rate are constant – for the other main industrialized countries : productivity levels assuming hours worked and the employment rate are the same as in the US 1. Introduction (2)

4 4 2. The estimates (1) re-estimation of the relationship used in Bourlès and Cette (2005) caused by the re-basing of European countries national account The under brackets figures are the standard deviations Time period : 1992-2001 ; Data used issued from OECD and Gröningen databases Panel reduced to the 14 most advanced OECD countries for the results to be stable using of the instrumental variables method to correct for errors of measurement and simultaneity bias

5 5 2. The estimates (2) In the short runIn the long run …ER : 1 point-0.57-0.43 …h : 1%-0.56-0.42 …CUR : 1 point0.110.08 …ITPR : 1 point0.680.51 On hourly productivity, in %, effects of

6 6 The Long run effects are … …very similar to those in Bourlès and Cette (2005) : - 0.38 and -0.46 … close to those found by Gust & Marquez,(2002, 2004) or Belorgey, Lecat & Maury (2004) with the AR term having the opposite sign learning-by-doing effect …close to Malinvaud (1973) for hours worked elasticity 2. The estimates (3)

7 7 US productivity level assuming hours worked and the employment rate are constant (benchmark 1970) compare change in such « structural » productivity level with those in « observed » productivity provides us an original interpretation of change in US productivity in terms of change in hours worked and the employment rate 3. Main Results (1) 3.1. US « structural » productivity (1)

8 8 3. Main Results (2) 3.1. US « structural » productivity (2)

9 9 The effects of the first oil crisis on US productivity Average annual growth rate of… 1970-19751975-1980 … « observed » productivity 2.081.11 effect of changes in of the employment rate 0.08-0.35 effect of changes in hours worked 0.290.11 … « structural » productivity 1.711.36 3. Main Results (3) 3.1. US « structural » productivity (3)

10 10 Recent change in US productivity level Average annual growth rate of… 1995-20002000-2004 … « observed » productivity 2.492.54 effect of changes in of the employment rate -0.130.31 effect of changes in hours worked 0.070.19 … « structural » productivity 2.562.04 3. Main Results (4) 3.1. US « structural » productivity (4)

11 11 « Structural » hourly productivity levels for the other main industrialized countries productivity levels assuming hours worked and the employment rate are the same as in the United States, expressed as a percentage of the US level. comparing the trends in such « structural » productivity level with those in « observed » productivity provides us an original interpretation of other industrialized countries catch-up with US productivity levels. 3. Main Results (5) 3.2. Other countries - levels (1)

12 12 3. Main Results (6) 3.2. Other countries - levels (2) Levels of hourly productivity… % of the US level - 2004

13 13 « Structural » productivity levels in 2004 Observed productivity % of the US level Effect of differences…Structural productivity % of the US level … in hours worked … in the employment rate Canada76.1-2.1+0.674.6 France103.1-7.0-3.892.3 Germany91.0-8.8-2.579.7 Ireland101.8-4.2-2.595.1 Italy78.4-5.5-6.066.9 Japan70.2-0.8-1.168.3 Netherlands95.4-10.8+0.384.9 Norway122.4-10.7+1.9113.6 Spain78.9-1.8-4.073.1 United Kingdom85.5-3.6+0.682.5 United States10000 3. Main Results (7) 3.2. Other countries - levels (3)

14 14 Same results than in Bourlès and Cette (2005) : The very high levels of relative observed productivity are generally attributable to lower hours worked and employment rates. in 2004, in all the countries, relative structural productivity was lower than observed productivity while the observed productivity level is similar to (over 95%) or even higher than the US level in Germany, France, Ireland, Norway and The Netherlands, the structural level is also very high in only two small countries with specific features : Ireland and Norway Apart from those two special cases, the fact that structural hourly productivity levels are higher in the United States than elsewhere shows that the United States is indeed setting the technical frontier 3. Main Results (8) 3.2. Other countries - levels (4)

15 15 3. Main Results (9) 3.2. Other countries - levels (5) In 2004

16 16 Catch-up phenomena : the illustrative case of Spain 3. Main Results (10) 3.2. Other countries – Evolutions (1) Levels of hourly productivity… % of the US level

17 17 The particular case of France 3. Main Results (11) 3.2. Other countries – Evolutions (2) Levels of hourly productivity… % of the US level

18 18 3. Main Results (12) 3.2. Other countries – Evolutions (3) The particular case of Netherlands Levels of hourly productivity… % of the US level

19 19 Observed and structural productivity evolution from 1970 to 2004 - % of the US level 3. Main Results (13) 3.2. Other countries – Evolutions (4)

20 20 4. Conclusion Original interpretation of changes in US productivity : –The effects of first oil crisis on structural productivity was not as big as thought –Since 2000, US structural productivity growth seems to decrease Other industrialized countries catch-up with US productivity levels is partially due to changes in hours worked and the employment rate.


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