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Labor productivity and the standard of living in Austria

Author

Listed:
  • Andreas Reinstaller
  • Michael Weichselbaumer

Abstract

This study analyzes the relationship between labor productivity growth and the standard of living in Austria from 2006 to 2019 using the statistical decomposition proposed by Oulton (2022). The standard of living is represented by the Equivalized Household Disposable Income (EHDI). The growth rate of EHDI is decomposed into contributions from productivity growth, labor market and demographic indicators, and price competitiveness. The analysis shows that the contribution of labor productivity growth to EHDI growth is the most important component in EHDI growth. However, with the slowdown in labor productivity growth between 2006 and 2019, its contribution has declined, and was therefore an important factor in the sluggish development of household income. Positive contributors to household income growth include the decline in household size and the increase in labor force participation. Negative contributors to EHDI growth include the decline in the household share of total income, the decline in hours worked per employee and the aging of the labor force. In particular, the aging of the labor force is an ongoing concern and its negative contribution to the development of living standards in Austria has increased over time. The results also suggest that the decline in the competitiveness of the Austrian economy vis-á-vis its main trading partners has had a negative impact on living standards

Suggested Citation

  • Andreas Reinstaller & Michael Weichselbaumer, 2023. "Labor productivity and the standard of living in Austria," Reports 0423, Büro des Produktivitätsrates.
    • Handle: RePEc:bpr:report:0423
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic Growth; Aggregate Labor Productivity; Income;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

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