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.
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Notes
The impact of structural reallocation on aggregate productivity has been examined by Olley and Pakes (1996) and Timmer and Szirmai (2000) for Asian economies, Carree (2003) using OECD countries, Brown and Earle (2008) for the United Kingdom, Van Biesebroeck (2005) for seven African countries, Saccone and Valli (2009) comparing China and India, and Chansomphou and Ichihashi (2013) focusing on BRIC countries. Several papers study the productivity gap between the USA and Europe by considering structural change in the two regions (Timmer et al. 2010; van Ark et al. 2012).
The same sectors are used as in the calculations of employment growth; sector U is always excluded and sector T is excluded for the countries for which data are not available.
The Romanian data for sector A show for instance a decrease in the number employed of 1.3 million or 28 % in 2002.
Beyond the analysis on an annual basis, we also examined longer time periods, distinguishing between the boom period 2000–2007, the bust period 2008–2009 and the recovery period 2010–2012 (results available upon request). In this analysis the bust period does not stand out as clearly as in the analysis where the SCI is calculated for every year.
Bulgaria and Slovenia may be considered unusual, as the between effect is never negative in these countries and the static effect is always positive in all the sample years.
The results for the individual countries are available in Appendix C in Kuusk et al. (2015).
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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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Kuusk, A., Staehr, K. & Varblane, U. Sectoral change and labour productivity growth during boom, bust and recovery in Central and Eastern Europe. Econ Change Restruct 50, 21–43 (2017). https://doi.org/10.1007/s10644-016-9180-3
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DOI: https://doi.org/10.1007/s10644-016-9180-3