Productivity, Hours Worked, and Tax/Benefit Systems in Europe and Beyond

We analyse the development of labour productivity and hours worked by the working-aged population in the EU25 countries and other OECD countries in 1960-2004. We emphasise the possible effects of taxes, benefits and other labour-market variables. First, we describe the trends in productivity and hours worked especially in the EU15 countries relative to the United States. Then we use both cross-section analyses of the 1995-2004 period and pooled least squares panel data analyses of the 1960-2004 period to explain the developments. Taxes and gross replacement rates do not correlate with productivity growth. Instead, productivity growth is influenced positively by investment into fixed assets, R&D and ICT, higher levels of education, and lower product market regulation. According to the results, taxes and gross replacement rates do have a negative effect on the average number of hours worked. Also the ratio between collective bargaining coverage and trade union density as well as higher product market regulation seem to have a negative effect on the number of hours worked.

Publication info

Series
Discussion Papers no. 1015
Date
2006
Keywords
Productivity, growth, hours worked, convergence
Avainsanat
tuottavuus, kasvu, tehdyt työtunnit, konvergoituminen
Jel
O47,J24,O57,C33
Pages
34
Price
10 €
Language
English