Labour Productivity and Technology Gap in European Regions: A Frontier Approach

29 Pages Posted: 23 Apr 2013

See all articles by Andrea Filippetti

Andrea Filippetti

Italian National Research Council (CNR-ISSIRFA); London School of Economics & Political Science (LSE); University of London - Birkbeck College

Antonio Peyrache

University of Queensland - School of Economics

Date Written: April 23, 2013

Abstract

Building on the Kumar and Russell (2002) methodology, we propose a conditional frontier approach which allows singling out the role of technology gap in explaining labour productivity differences. We find convergence in labour productivity growth driven by capital accumulation and technical change in 211 European regions in 18 countries over the period 1995‐2007. In lagging behind regions productivity growth is mainly driven by capital accumulation. The technology gap does not play a role in driving labour productivity growth and remains stable across regions in the considered period. Cohesion policy seems to be more effective in terms of fixed investment rather than on technological capabilities. Technology gap represents a source of unused potential productivity growth to be exploited in the future in order to substantiate economic convergence in Europe.

Keywords: labour productivity growth, technology gap, data envelopment analysis, EU Cohesion policy

JEL Classification: O3, R11, C14

Suggested Citation

Filippetti, Andrea and Peyrache, Antonio, Labour Productivity and Technology Gap in European Regions: A Frontier Approach (April 23, 2013). Available at SSRN: https://ssrn.com/abstract=2255352 or http://dx.doi.org/10.2139/ssrn.2255352

Andrea Filippetti (Contact Author)

Italian National Research Council (CNR-ISSIRFA) ( email )

Via dei Taurini, 19
00185 Rome
Italy

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

University of London - Birkbeck College ( email )

Malet Street
London, WC1E 7HX
United Kingdom

Antonio Peyrache

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

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