OECD Economics Department Working Papers

ISSN: 
1815-1973 (online)
http://dx.doi.org/10.1787/18151973
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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.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

 

Regulation, institutions and productivity

New macroeconomic evidence from OECD countries You or your institution have access to this content

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Author(s):
Balázs Égert1
Author Affiliations
  • 1: OECD, France

08 June 2017
Bibliographic information
No.:
1393
Pages:
30
http://dx.doi.org/10.1787/579ceba4-en

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Empirical research on the drivers of multi-factor productivity (MFP) is abundant at the firm- and industry level but surprisingly little research has been conducted on the determinants of MFP at the macroeconomic level. In this paper, we seek to understand the drivers of country-level MFP with a special emphasis on product and labour market policies and the quality of institutions. For a panel of OECD countries, we find that anticompetitive product market regulations are associated with lower MFP levels and that higher innovation intensity and greater openness go in tandem with higher MFP. We also find that the impact of product market regulations on MFP may depend on the level of labour market regulations. Better institutions, a more business friendly environment and lower barriers to trade and investment amplify the positive impact of R&D spending on MFP. Finally, we also show that cross-country MFP variations can be explained to a considerable extent by cross-country variation in labour market regulations, barriers to trade and investment and institutions (including corruption).
Keywords:
OECD, human capital, measurement, multi-factor productivity
JEL Classification:
  • C2: Mathematical and Quantitative Methods / Single Equation Models ; Single Variables
  • J2: Labor and Demographic Economics / Demand and Supply of Labor
  • O4: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity
 
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