Title:
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Why is Europe falling behind? Structural transformation and services' productivity differences between Europe and the U.S.
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Author:
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Buiatti, Cesare; Duarte, Joao B.; Sáenz, Luis Felipe
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Abstract:
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We explain labour productivity differences of the service sector between Europe and the U.S.
through the labour allocation taking place within the service sector. We measure labour
productivity using a multisector structural transformation model that decomposes services into 11
sub-sectors comparable across Europe and the U.S. We identify wholesale and retail trade as
well as business services to be the two sectors responsible for most of the lack of catch-up in
labour productivity between Europe and the U.S. We also investigate which institutional
characteristics are associated with the different performances of sectoral productivity across
sectors. We empirically explore our country-sector panel measures of labour productivity levels,
and our results suggest that differences in taxation, pro-business attitudes, ICT diffusion and rates
of innovation are disproportionally correlated with the productivity of wholesale, retail and
business services relative to the rest of the sectors in the economy. |
Abstract:
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The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396. |
Subject(s):
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-Structural transformation -Service sector -Nonhomothetic CES preferences -Labour productivity |
Rights:
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This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
https://creativecommons.org/licenses/by/4.0/
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Document type:
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Working Paper |
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