Structural and productivity shift of industries in Slovakia and Czech Republic: A comparative study

Abstract

The objective of this paper was to explore the labor productivity growth and employment changes, thereby describing structural changes in the economies of Slovakia and Czech Republic in the time span of 1996–2016. As the main research method we chose shift-share analysis. The decomposition of the method identified the factors behind structural changes. The results shown that during the study period, the main driver of labor productivity in both economies was the upgrade of productivity itself within the industries (the so-called “within effect”). Slovakia was able to outpace Czech Republic in case of industrial production, agriculture and professional services. Employment had been evolving in both economies differently, particularly, Slovakia recorded the drop in employment in the sector of industrial production, whereas Czech Republic did not. Both economies have recorded labor switch from the primary sector to the services sector or to manufacturing. Overall taken, despite of very similar natural and geographic conditions, same political integration trends, and also similar economic background, perhaps due to the influence of sovereign policies and institutions, these two economies have been evolving differently.