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Economic Change and Restructuring

, Volume 50, Issue 1, pp 21–43 | Cite as

Sectoral change and labour productivity growth during boom, bust and recovery in Central and Eastern Europe

  • Andres Kuusk
  • Karsten StaehrEmail author
  • Uku Varblane
Article

Abstract

This paper assesses the extent of structural or sectoral change and its importance for aggregate productivity growth during times of boom, bust and recovery. The analysis covers 10 EU countries from Central and Eastern Europe over the years 2001–2012. The reallocation of labour across sectors was substantial during the boom, very extensive in 2009 at the depth of the crisis and modest in the subsequent recovery period. The contribution of sectoral change to aggregate productivity growth is computed using various decomposition methods. Changes in labour productivity within sectors play the dominant role for aggregate productivity growth, while reallocation of labour between sectors is less important. This pattern is found through most of the sample period despite large differences in the extent of sectoral change during the boom, crisis and recovery.

Keywords

Labour productivity Structural change Reallocation Productivity decomposition 

JEL Classification

L16 E32 P23 

Notes

Acknowledgments

The authors would like to thank, without implicating, two anonymous referees, the editor of Economic Change and Restructuring, Jaan Masso, Jaanika Meriküll and Tairi Rõõm for useful comments to earlier versions of the paper. The paper has also benefitted from comments received at presentations in Eesti Pank, a research seminar at Tartu University and the 2014 EACES conference in Budapest. Financial support from the project IUT20–49 “Structural Change as the Factor of Productivity Growth in the Case of Catching up Economies” is acknowledged. Part of the article was written when Andres Kuusk was a visiting researcher at Eesti Pank. The views expressed are those of the authors and not necessarily those of Pank or other parts of the Eurosystem.

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Faculty of Economics and Business AdministrationUniversity of TartuTartuEstonia
  2. 2.Department of Finance and EconomicsTallinn University of TechnologyTallinnEstonia

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