---
title: "Productivity, Hours Worked, and Tax/Benefit Systems in Europe and Beyond"
authors:
  - name: "Kaitila, Ville"
    url: "https://www.etla.fi/henkilot/kaitila-ville/"
    sameAs:
      - "https://orcid.org/0000-0002-9050-3431"
      - "https://scholar.google.com/citations?user=iYY2NssAAAAJ"
      - "https://twitter.com/villekaitila"
date_published: "2006-05-03"
series: "Discussion Papers no."
series_number: "1015"
jel_codes:
  - "O47"
  - "J24"
  - "O57"
  - "C33"
language: "en"
publisher: "ETLA Economic Research"
pdf_url: "https://www.etla.fi/wp-content/uploads/2012/09/dp1015.pdf"
keywords:
  - "Productivity"
  - "growth"
  - "hours worked"
  - "convergence"
identifier: "https://www.etla.fi/julkaisut/id/Discussion-Papers-no.-1015"
---

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

**Published:** 2006-05-03  
**Categories:** Publikationer  
**Tags:** Diskussionsämnen, productivity  
**URL:** https://www.etla.fi/sv/publikationer/dp1015-en/

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.

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