Journal of Productivity Analysis

, Volume 49, Issue 1, pp 95–109 | Cite as

Technology catching-up and regulation in European regions

  • Francisco Javier Escribá-Pérez
  • María José Murgui-García
Article

Abstract

This paper analyses the effects of the intensity of regulations in the product and labour markets on the growth of total factor productivity (TFP) for 121 European regions. A technological catch-up model is estimated for the period 1995–2007. We use the spatial lag of X (SLX) model to capture possible spatial interactions across spatial units. Our empirical findings show that lower levels of regulation are associated with higher TFP growth. Lower barriers to entrepreneurship and lower bureaucratic costs have a positive effect on productivity growth. Corruption raises operational costs, distorts the allocation of resources and negatively affects innovation activities, thereby reducing TFP growth. Further liberalization in the labour market (in terms of hiring and firing regulation, working hours regulation and employment protection legislation) has a significant positive effect on the growth of TFP. In addition, both regional technological and regional human capital have a positive impact on the TFP growth in European regional economies.

Keywords

Productivity Regulation Human capital Technology capital Catch-up European regions 

JEL classification

O47 R11 R38 O52 C23 

Notes

Acknowledgements

The authors gratefully acknowledge the financial support of the ERDF as well as from the Generalitat Valenciana PROMETEO/2016/097. María José Murgui-García acknowledges the financial support from the Spanish Ministerio de Economía, Industria y Competitividad, Project ECO2015-65049-C2-1-P. The authors thank three anonymous referees for valuable comments and suggestions. They are grateful to R. Boix for helpful comments.

Compliance with ethical standards

Conflict of interest

The author declares that he has no competing interests.

Supplementary material

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© Springer Science+Business Media, LLC, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Department of Economic AnalysisFacultat dEconomia, Universitat de ValènciaValènciaSpain

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