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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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An Analysis of Productivity Performance in Spain Before and During the Crisis
Exploring the Role of Institutions
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- Juan S. Mora Sanguinetti1, Andrés Fuentes2
- Author Affiliations
- 1: Banco de España, Spain
- 2: OECD, France
- 30 July 2012
- Bibliographic information
The Spanish economy experienced significantly weaker labour productivity growth than other OECD economies and failed to catch up with the most advanced economies in the period 1996-2007. In recent years labour productivity growth has accelerated, but this recovery is likely to be due to cyclical and temporary factors. The aim of this paper is to identify what factors weigh on weak trend productivity growth. The relatively weak performance largely reflects the low growth of total factor productivity within a wide range of sectors, with very limited impact of composition effects, while the capital stock and educational attainment of the workforce have grown relatively strongly. The paper investigates the role of some institutions in deterring innovation, competition and the growth of successful firms. It argues that Spain needs to have a more flexible labour market and collective bargaining system to improve productivity performance. Productivity performance would also benefit from a more flexible business environment in such a way that both entry and exit of firms in the economy are less costly, including a reform of bankruptcy legislation, steps to make civil judicial procedures more efficient and a greater reduction of barriers to entry into the retail trade sector.
- JEL Classification:
- J24: Labor and Demographic Economics / Demand and Supply of Labor / Human Capital ; Skills ; Occupational Choice ; Labor Productivity
- K0: Law and Economics / General
- O4: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity