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Ark, Bart van --- "Does the European Union Need to Revive Productivity Growth?" [2006] ELECD 117; in Mundschenk, Susanne; Stierle, H. Michael; Stierle-von Schütz, Ulrike; Traistaru-Siedschlag, Iulia (eds), "Competitiveness and Growth in Europe" (Edward Elgar Publishing, 2006)

Book Title: Competitiveness and Growth in Europe

Editor(s): Mundschenk, Susanne; Stierle, H. Michael; Stierle-von Schütz, Ulrike; Traistaru-Siedschlag, Iulia

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845426620

Section: Chapter 5

Section Title: Does the European Union Need to Revive Productivity Growth?

Author(s): Ark, Bart van

Number of pages: 24

Extract:

5. Does the European Union Need to
Revive Productivity Growth?
Bart van Ark1

5.1 INTRODUCTION

During the second half of the 1990s the comparative growth performance of
Europe vis-à-vis the United States has undergone a marked change. For the
first time since World War II labour productivity growth in most countries
that are now part of the European Union (EU) fell behind the US for a
considerable length of time. Until the beginning of the 1970s rapid labour
productivity growth in the EU went together with a catching-up in terms of
GDP per capita levels on the US. A first break in this pattern occurred in the
mid 1970s. While catching-up in terms of labour productivity continued, the
gap in GDP per capita levels between the EU and the US did not narrow any
further after 1975 (see Figure 5.1). This differential performance reflects the
slowdown in the growth of labour input in Europe, which was related to
increased unemployment, a decline in the labour force participation rates and
a fall in average working hours. The second break, which is the focus of this
chapter, occurred in the mid 1990s when the catching up in terms of labour
productivity also came to a halt once the average EU level reached the US
level. In fact a new productivity gap opened up since 1995. Whereas average
annual labour productivity growth in the US accelerated from 1.3% during
the period 1980­1995 to 1.9% during ...