Working Paper Series no. 133: A comparison of Structural Productivity Levels in the Major Industrialised Countries

Abstract

Hourly labour productivity levels in a number of European countries are thought to be very close to, or possibly even higher than the level 'observed' in the United States. At the same time, however, there are big differentials between hours worked and/or employment rates in these countries and in the United States. Frequent mention is also made of the theory of diminishing returns to hours worked and the employment rate. The object of the analysis proposed here is to adjust the 'observed' levels of hourly productivity for the effect of the differentials (with the United States) in the hours worked and/or employment rates of several categories of the population of working age in order to calculate 'structural' hourly productivity. The results obtained confirm the diminishing returns to hours worked and the employment rate (especially where young and elderly people are concerned). The level of 'structural' hourly productivity appears to be highest in the United States, suggesting that the differential between per capita GDP in the European countries and in the United States is attributable to hours worked and employment rates being at lower levels, and also to lower 'structural' hourly productivity.

Renaud Bourlès and Gilbert Cette
October 2005

Classification JEL : J24, E24, F01.

Keywords : productivity, employment rares, working time, ICTs, well-being.