Publication details

Labour Market Institutions and Total Factor Productivity. An Evidence in the European Union



Year of publication 2016
Type Article in Proceedings
Conference 34th International Conference Mathematical Methods in E conomics 2016 Conference Proceedings
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords Total factor productivity; Labour market institutions; European Union; Panel data model; Growth Accounting
Description In recent years, several economic studies relate the relatively unfavourable development of total factor productivity (TFP) in the Europea in countries to inherent rigidities in labour markets. Therefore, the issue of labour market is in the centre of theoretical and empirical research. The aim of this paper is to determine the effects of five selected labour market institutions on the development of TFP in the member states of the European Union. In particular, by means of an endogenous growth model extended by institutions, we provide a verification of the following hypothesis: Labour market institutions have significant but, in average, more likely negative impact on the development of TFP in the European Union. To estimate the policy augmented productivity equation with a broad measure of TFP we use a panel data model with fixed effect. The analysis is executed on 19 member states of the European Union and covers the period of 1999 - 2013. Observations for productivity growth are calculated via growth accounting method. The results suggest a statistically significant effect of labour market institutions and confirm the validity of our hypothesis.
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