The French labour productivity slow-down during the nineties?

At the beginning of the nineties labor productivity in France slowed down strongly. Yearly labor productivity (per worker) growth in the non-farm business sector fell from 2% during the 1982-1992 period to 0.7% between 1993 and 2000. This productivity slowdown seems to have stimulated employment, especially in the tertiary sector. Several papers deal with this subject, but none can claim to give a proper explanation of the whole productivity slowdown. This paper investigates the productivity slow-down in France using quarterly microeconomic data. We estimate an employment equation, paying special attention to the long run specifications and to the cointegration problems. The equations are estimated on the non-farm business sector. We also concentrate on the non-manufacturing business sector, since it was the most affected by the labor productivity slowdown. We conclude that the drop in the number of hours worked, the change in the labor cost and in that of unskilled workers relative to skilled workers have contributed to the growth of employment in France. Moreover, we cannot exclude a slackening of the long run productivity growth.