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Trends in “structural” productivity levels in the major industrialized countries. Renaud Bourlès (Université de la Méditerranée) Gilbert Cette (Banque de France and Université de la Méditerranée). 1. Introduction (1). Hourly labour productivity, hours worked and employment rate in 2004.
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Trends in “structural” productivity levels in the major industrialized countries Renaud Bourlès (Université de la Méditerranée) Gilbert Cette (Banque de France and Université de la Méditerranée)
1. Introduction (1) Hourly labour productivity, hours worked and employment rate in 2004 sources : OECD ; * PPP 2000
1. Introduction (2) • 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
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
2. The estimates (2) On hourly productivity, in %, effects of
2. The estimates (3) 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
3. Main Results (1)3.1. US « structural » productivity (1) • 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 (3)3.1. US « structural » productivity (3) The effects of the first oil crisis on US productivity
3. Main Results (4)3.1. US « structural » productivity (4) Recent change in US productivity level
3. Main Results (5)3.2. Other countries - levels (1) « 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 (6)3.2. Other countries - levels (2) Levels of hourly productivity… % of the US level - 2004
3. Main Results (7)3.2. Other countries - levels (3) « Structural » productivity levels in 2004
3. Main Results (8)3.2. Other countries - levels (4) 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 (10)3.2. Other countries – Evolutions (1) Catch-up phenomena : the illustrative case of Spain Levels of hourly productivity… % of the US level
3. Main Results (11)3.2. Other countries – Evolutions (2) The particular case of France Levels of hourly productivity… % of the US level
3. Main Results (12)3.2. Other countries – Evolutions (3) The particular case of Netherlands Levels of hourly productivity… % of the US level
3. Main Results (13)3.2. Other countries – Evolutions (4) “Observed” and “structural” productivity evolution from 1970 to 2004 - % of the US level
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.