Why has productivity growth declined?
- Authors:
- OECD
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Pages
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65–96
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DOI
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10.1787/eco_surveys-dnk-2009-4-en
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Abstract
Labour productivity decelerated markedly over the 1990s and into the current decade. One reason is the slowdown in capital deepening related to the trend increase in employment. Greater inclusion in the labour market of workers with lower-than-average productivity may also have contributed. However, these factors do not account for the observed reduction in total factor productivity (TFP) growth. The TFP slowdown is puzzling in light of Denmark’s comparatively productivityfriendly policies and institutions. The financial crisis is likely to hold back productivity growth over the medium run, through the pace of capital deepening and, possibly, through lower investment in R&D and innovation. This chapter analyses the slowdown in productivity growth and reviews the policies that could help boost it in the future.
