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A structural analysis of productivity in Italy: a cross-industry, cross-country perspective

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  • Rosalia Greco

    (Bank of Italy)

Abstract

Since 2000, Italy's output growth lagged behind countries like Germany, France, and Spain, primarily due to weak labor productivity dynamics. Italy's labor productivity growth, especially low before the Great Recession, showed a small improvement afterwards, driven by the business sector. Productivity growth and levels vary across sectors, with the industrial sector generally outperforming market services in all countries. Italy's low aggregate growth, however, cannot be traced back to a composition tilted towards low productivity sectors, rather to across-the-board insufficient sectors' productivity growth. Few exceptions emerge in the industrial sector in 2014-2019: some manufacturing sectors that are more exposed to international trade exhibited higher productivity growth in Italy than elsewhere. Investment affects labor productivity growth through capital deepening. Investment trends, influenced by the financial crisis, varied across countries and sectors. Investment in intangibles (especially important for innovation) consistently increased, while investment in other assets fluctuated, with Italy and Spain experiencing delayed recovery. Intangibles constituted a larger share of investment in the industrial sector, and were most relevant in France.

Suggested Citation

  • Rosalia Greco, 2023. "A structural analysis of productivity in Italy: a cross-industry, cross-country perspective," Questioni di Economia e Finanza (Occasional Papers) 825, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_825_23
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2023-0825/QEF_825_23.pdf
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    References listed on IDEAS

    as
    1. Chad Syverson, 2017. "Challenges to Mismeasurement Explanations for the US Productivity Slowdown," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 165-186, Spring.
    2. Andrea Linarello & Andrea Petrella, 2017. "Productivity and Reallocation: Evidence from the Universe of Italian Firms," International Productivity Monitor, Centre for the Study of Living Standards, vol. 32, pages 116-136, Spring.
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    More about this item

    Keywords

    labor productivity; growth; investment;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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