An international comparison of the impact of the 2008 crisis on productivity

Abstract

This article seeks to shed light on the puzzle of productivity after the 2008 crisis in the United States, the United Kingdom and the main countries in the Euro Zone. First of all, we calculate the productivity according to the Solow model. Afterwards, we study the TPF cycle in each country applying the Bai and Perron structural break test. Finally, we measure the productivity gap in relation to the pre-crisis trend, and the contribution of TFP, capital and labour. The United States and the Euro Zone have a similar productivity gap, but TFP reduction is more important in Europe (partially offset by better behaviour of the capital to labour ratio than in the United States). Significant differences arise within the Euro Zone.

Keywords:

• productivity
• TFP
• capital to labour ratio
• crisis

JEL Classification:

• F01
• J00
• O47
• O57

Notes

¹ The number of unemployed in the sector increased from 300.000 in 2008Q1 to 600.000 in 2010Q1 (Labour Force Survey).