Labor productivity in Western Europe 1975-1985: An intercountry, interindustry analysis

Abstract

Using intercountry input-output tables and disaggregated employment data, we decompose labor productivity growth between 1975 and 1985 in six Western European countries into partial effects of six determinants including changing international trade and changing final demand. To this end, new multiplicative decomposition formulas are derived and implemented. In a similar way, we study labor productivity changes in vertically integrated industries. The effects of structural change on convergence are investigated also. We see this paper as an attempt to merge the convergence literature with earlier single-country productivity-change decompositions using input-output data.