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Productivity Growth and Foreign Trade balances in the EU and the U.S.

UPDATE: Our reader Potsdam Amerikanerin has sent two links with more specific economic statistics than the data cited by the Financial Times:
Deutsche Bank Research writes that "hourly labour productivity in the euro area in 2005 was 9.1% lower than in the US. Back in 1995 the euro area had been ahead by 1%, as chart 1 illustrates. Over the past 10 years productivity has risen by 13.2% in the euro area, but 25.8% in the US." This chart also shows that France has higher labor productivity than the US. The Deutsche Bank Research paper (pdf) is full of interesting graphs and analysis, including data about productivity per employed worker and productivity per capita.
The European Union is catching up to the US: The Conference Board writes that labor productivity growth was slightly higher in the EU than in the US. There are considerable differences within the EU: Finland, Sweden and Germany had significantly higher labor productivity growth than southern EU countries and the US:
U.S. labor productivity growth in 2006, at 1.4%, was the lowest in more than a decade and, despite a strong business cycle, the enlarged European Union saw modest productivity gains of only 1.5% last year. (...) U.S. labor productivity slowed for the third consecutive year in 2006 and was well below that of the other two largest advanced economies in the world, Germany and Japan (2.5% in 2006). The latest productivity estimates, running up to the third quarter 2006, suggest that most of the U.S. slowdown comes from service sectors.
Within Europe, Germany displayed a significant acceleration in productivity growth (2% in 2006 compared to 1.3% in 2005) even though most of its economic recovery is likely to be cyclical. External factors in the form of improved export performance account for a substantial part of Germany's productivity recovery while the domestic sector, particular consumer expenditure, still remains weak. Nordic countries, in particular Finland (3.7%) and Sweden (2.8%), showed productivity growth well above the European average. In contrast, the productivity record of most Mediterranean countries, particularly Italy, Portugal and Spain, remains consistently weak at 0.1%, 0.3% and -0.5% respectively.
End of update. Original post with more information on foreign trade balances:

The EU has higher labor productivity growth than the US, writes the Financial Times:
The US economy last year recorded its lowest rate of labour productivity growth in more than a decade, with growth in output per hour worked falling behind the EU and Japan. (...) Europe improved its productivity performance considerably last year as it enjoyed its first year of strong economic growth since 2000. However, the improvement in Nordic countries and Germany masked continued weakness in southern Europe, where growth was generated by surging employment rather than an improvement in the efficiency of the economies of Spain, Italy and Portugal.
• Germany: Exports +13.7%; Imports +16.5%, explains the Federal Statistical Office:
Germany exported commodities to the value of EUR 893.6 billion and imported commodities to the value of EUR 731.7 billion in 2006. German exports in 2006 thus were 13.7% and imports 16.5% above the respective 2005 levels. The foreign trade balance showed a surplus of EUR 161.9 billion in 2006. In 2005, the foreign trade balance showed a surplus of EUR 158.2 billion. According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of EUR 100.9 billion in 2006, which included the balances of supplementary trade items (EUR –19.8 billion), services (EUR –24.4 billion), factor income (net) (EUR +9.8 billion) and current transfers (EUR –26.5 billion). In 2005, the German current account showed a surplus of EUR 90.3 billion.
US-China trade deficit increases again, reports the Financial Times:
China’s trade surplus reached $177.5bn (£118.7bn) last year, 74 per cent higher than in 2005, a rise that will intensify pressure on Beijing further to open its markets and accelerate the revaluation of its currency. The growth in the surplus reported by China’s customs agency – up from $102bn in 2005 and $32bn in 2004 – has been driven by continued strength in exports, up 27 per cent year on year, and relatively weaker imports growth of 20 per cent. The bilateral deficit with the US is even higher according to Washington’s measure, reaching an all-time high of $214bn in the 11 months to November.

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[Source: Atlantic Review - Analysis of Transatlantic Relations and U.S. Foreign Policy] quoted: In 2005, the foreign trade balance showed a surplus of EUR 158.2 billion. According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of EUR 100.9 billion in 2006, which included the balances of supplementary trade items (EUR –19.8 billion), services (EUR –24.4 billion), factor income (net) (EUR +9.8 billion) and current transfers (EUR –26.5 billion).

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Pat Patterson on :

I suspect that productivity figures were the only figures that the Financial Times could find that might suggest that the inefficiencies in the EU economy, most importantly the German economy, were not as bad as they actually are. GDP growth is still lagging from where it ideally should be, 3.4% for the US and 2.2% for Germany, and 2.8% for the EU. But the drop in the total national debt in the US to 64.7% of national GDP compares very favorably to the rise in debt of Germany, 66.8% and Japan's, a staggering 175%. Oddly enough the rates of productivity growth are the greatest in countries that have higher rates of unemployment, especially in countries that might be loathe to hire due to an inability to fire. While low unemployment countries generally see productivity rates marginally rise or stay flat because hiring more people at the macroeconomic level doesn't increase growth. Rather than invest in new machinery or software these bigger companies hire less qualified workers, having ideally already hired the most qualified.

JW-Atlantic Review on :

David recently quoted from the Economist: "So, contrary to popular perceptions, America's economy has not significantly outperformed Europe's in recent years. And to achieve this not-much-better-than parity, [b]America has had to pump itself full of steroids[/b]. Since 2000 its structural budget deficit (after adjusting for the impact of the economic cycle) has widened sharply, while American households' saving rate has plunged, causing the current-account deficit to swell. Over the same period, the euro-area economies saw no fiscal stimulus and household saving barely budged." Pat wrote: "But the drop in the total national debt in the US to 64.7% of national GDP compares very favorably to the rise in debt of Germany, 66.8% and Japan's, a staggering 175%." Interesting. You could also link to your source, which seems to be: [url]https://www.cia.gov/cia/publications/factbook/rankorder/2186rank.html[/url] This source, however, does not indicate whether the debt has risen or fallen? So what is your source? Here's a graphic based on EU data about the rise and fall of deficit spending in the US, Germany, Japan and EU15: [url]http://de.wikipedia.org/wiki/Bild:StaatlNeuverschbis2004.PNG[/url] It suggests that Germany is below average of EU-15. The EU-15 is doing better than the US. The US and Europe have similar cycles of the rise and fall of deficit spending. Japan does not follow these cycles. I guess, this suggests that the transatlantic economies and politics have more in common with each other than with Japan. Due to stronger economic ties? P.S.: Should not we consider household debts in the US and Europe as well to measure the health of our economies?

Pat Patterson on :

There is a difference between budget deficit and national debt, which are the figures I was quoting from the Factbook. In 2005 Germany's national debt to GDP percentage was 62.4%, also from the Factbook, 2005. Yes, indeed there was a huge jump in deficits after 2000 but the growth in the economy since 2003, including the mild recesion after 9/11, has been more than enough to reduce the percentage and size of the deficits. If we consider household debt then we also should consider ownership of property, ie., personal homes, as part of the savings rate. And as I argued earlier being able to take on personal or national debt indicates economic health not weakness. The guys in the back room loan money out, and charge for it, to those that can pay it back. The quote "America has had to pump itself full of steroids", never made much sense the first time it was used and even less now. The US rate is indeed too high at 3.7% but when compared to the EU's lower 2.5% not really an outlier. But I think we are in agreement that neither area is doing as well as they could.

JW-Atlantic Review on :

"If we consider household debt then we also should consider ownership of property, ie., personal homes, as part of the savings rate." Absolutely. I thought it is included in the savings rate. Are you saying that it isn't? "The guys in the back room loan money out, and charge for it, to those that can pay it back." I am not an economist, but I thought many or most economists believe that the US housing market is overheating. Perhaps it has cooled down a bit recently. I don't follow economic news that much. Anyway: Some or many in the US think that the European economies are about to collapse. No more Euro in the a few years. Some think we are all going to be beggars, cities full of old people because we allegedly don't reproduce blabla. Some concerns are justified, but most are exaggerate. I don't hear such exaggerated predictions about the US economy on my side of the Atlantic, but there probably are some smaller exaggerations. Many in the Europe think that the US economy is about to tank due to trade deficit, deficit spending, housing market bubble etc. Such predictions have been made for years or even decades and they never came true... Though, some signs are worrying, aren't they? [b]I guess, there are a lot of exaggerations on both sides of the Atlantic regarding the strength and health of the economies on the other side of the Atlantic. I don't know enough to assess all that, but if you or anybody else can point to some good articles, I will blog about it. Anything to promote a better understanding of what is going on the other side of the Atlantic.[/b] Thanks! When I wrote that the EU has higher labor productivity growth than the US, then this was not intended to boast or make the US look bad. (In the past reader Joe often wrote that this would be my point.) Rather it was to point that there is some progress in the EU. Perhaps some American readers, who are convinced that the EU economies are doing terribly awful, might reconsider, if they read these statistics. Likewise, if you, Pat or anybody, else has some statistics on the health of the US economy or some article from a respected source, please let me know.

Pat Patterson on :

In the US owning a house is considered a debt and the equity is not counted as an asset until the property is sold. Then unfortunately it is considered as income yet taxed as a capital gain. If you can figure that one out then more power to you. I should have more strongly stated that the relatively flat economy and flat job market are normally not conducive to productivity gains and Germany has acheived the "hated" capitalist goal of making its workers more efficient without new hires or higher wages. But unless these gains are enough then German corporations will not have enough capital to reinvest and hire which would increase employment and tax receipts. Some people in the US think aliens landed in Nevada just as some Europeans think plutocrats wear top hats and toss dimes to the poor. And neither is especially important except for the noise they create.

Potsdam Amerikanerin on :

I wonder what the productivity growth rate is for the first 15 EU states (without the 12 newest ones), and how that compares to the US. According to the FT article, the productivity of the 12 new EU members grew 4.1% last year, but according to [url=http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3049]the Conference Board's own press release[/url], the enlarged EU achieved just 1.5% productivity growth. [url=http://www.dbresearch.de/PROD/DBR_INTERNET_EN-PROD/PROD0000000000204807.pdf]This report from Deutsche Bank Research[/url] is full of interesting graphs and analysis, including data about productivity per employed worker and productivity per capita (which are at least as useful as data about productivity per hour worked). In particular, note that France, where employees work the fewest hours, has the highest productivity per hour worked. That's not really surprising, is it? Any measurement of productivity per hour worked is going to favor those countries in which each employee works fewer hours (and penalize countries like the US where people work more hours).

JW-Atlantic Review on :

[b]Thank you so much[/b] for continuing to provide great links. Very much appreciated. They are much more specific than the Financial Times article. I have written an update. I only quoted them briefly, but encourage everyone to read the entire 8 pages Deutsche Bank Research paper. Re your last paragraph. I agree, but I would not say that this "penalizes countries like the US." The workers, who are required to work long hours are penalized. I mean, what's the use of long working hours if productivity is low? It just increases the company's electricity and water bills. After a certain number of hours the average worker cannot maintain high productivity anymore. The average worker is not employed by Google with free massages, free lattes, health food cafeterias, gyms, lava lamps and all the other stuff, which is supposed to help folks relax in a break so that they can continue with high productivity after the break. If one guy needs ten hours to finish a certain job (because he communicates with colleagues via email rather than walking to their cubicle; or he blogs during working hours), while another guy just needs seven hours to get the job done, then I would not call the long hours of the first guy a penalty. Besides, when discussing living standards in the US and Europe, usually income levels are compared. Though, obviously working fewer hours also increases living standards: More time to play with the kids, to exercise, to cook some healthy food etc. Less time at work => Longer life? Life expectancy in United States: 77.85 years United Kingdom: 78.54 Germany: 78.80 Italy: 79.81 France: 79.73 Well, Japan "ruins" the statistics: Japan: 81.25 years [url]https://www.cia.gov/cia/publications/factbook/rankorder/2102rank.html[/url]

David on :

Don't you think the longer life expectancy has more to do with universal healthcare delivery? 50 million Americans lack health insurance, and tens of millions are underinsured. That is bound to be seen in the statistics. BTW, check out John Edward's proposal for universal coverage.

VinceTN on :

A whole extra year of life and we only have to destroy America's cultural outlook to achieve it. What a deal. Of course, Euros don't have the hypertension, heart disease or diabetes rates of Americans due to better eating overall. Euros also don't expect the most expensive level of care, sue at the drop of a hat, nor do they wish to give the Government 12% of thier income to "wisely" distribute to care agencies. Socialized medicine cannot afford Edward's lawsuit industry. Edwards is a boy looking to pervert grievences and fears to get power. He won't last and his ideas are too simplistic to be useful even in debate. He needs to stick to designing unnecessarily extravegant homes for himself.

Potsdam Amerikanerin on :

Although the "labour productivity" graph that you added to your blog entry paints a pretty picture, the overall conclusions of the Deutsche Bank Report are not quite as cheerful as one might hope. Indeed, the report states that such progress is needed in Europe "just to prevent a decline in GDP growth stemming from deteriorating demographics," and notes that this year's productivity growth is "unlikely to reflect more than a cyclical rebound." Furthermore, I've seen [url=http://engram-backtalk.blogspot.com/2007/01/fretting-over-productivity.html]some other nice graphs online[/url] which look a bit different. In particular, the Deutsche Bank's graph seems to imply that US and EU labor productivity were about the same at some point in the mid 1990s, whereas the "GDP per Hour (EU vs. US)" graph on the page that I just linked tells a different story. Perhaps one of the graphs is simply incorrect, or perhaps the one of the graphs is based on data for a smaller EU at the beginning, and a larger EU later. I don't have time to make such calculations right now! However, [url=http://www.ggdc.net/dseries/totecon.html]the Conference Board's raw data is available online[/url] if anyone else cares to work out the details.

JW-Atlantic Review on :

"Furthermore, I've seen some other nice graphs online which look a bit different. In particular, the Deutsche Bank's graph seems to imply that US and EU labor productivity were about the same at some point in the mid 1990s, whereas the "GDP per Hour (EU vs. US)" graph on the page that I just linked tells a different story." The Deutsche Bank graph is for the EMU, while the anonymous professor's graph is for the "enlarged EU." Does not it make more sense to compare the enlarged EU with NAFTA? I think that the prof's most relevant graph is the one, where he compares GDP per hour of the US with the EU-4. Those are the G7 members France, Germany, Britain, Italy. The US has been doing better than the EU-4, but the differences are not so big. The differences would be even smaller, if we would not count Italy, which last year just had one of the worst rates of productivity growth with just 0.1% and should never have been let into the Eurozone anyway. Question: [b]Does the difference in labor productivity in that graph, justify the typical doom saying of the inefficient economies in France and Germany?[/b] There is so much harsh criticism in the US MSM and a lot of exaggerated Euro bashing in the US blogosphere. This is not justified, I believe. This was my point in this post.

Potsdam Amerikanerin on :

"The Deutsche Bank graph is for the EMU, while the anonymous professor's graph is for the "enlarged EU"." Thanks for pointing out that the Deutsche Bank graph shows labor productivity in the EMU, and not the EU. I'm still not sure how to interpret it, though. Aren't the EMU countries the same ones as those in the Eurozone? If so, what was the Eurozone back in 1995, before the 11 initial countries were even chosen? Is Greece included in the data? If so, is it there from the beginning, or not? If anyone here has any insight about the answers to these questions, please share the information! I'm asking because the data that's graphed doesn't seem to match other data I've seen. In particular, here's the OECD data, which I got from the sheet 10 of [url=http://www.oecd.org/LongAbstract/0,2546,en_2825_30453906_36396771_1_1_1_1,00.html]an Excel spreadsheet available here[/url]: GDP per hour worked (using US dollars with base year 2000) Year____USA__Eurozone__EU-15 1995____34.0____32.4____31.7 1996____34.8____32.7____32.1 1997____35.4____33.4____32.8 1998____36.1____33.8____33.2 1999____37.0____34.3____33.7 2000____37.9____35.1____34.6 2001____38.6____35.5____35.0 2002____39.8____35.9____35.5 2003____40.9____36.3____35.9 2004____42.1____36.7____36.4 2005____42.9____37.0____36.8 "Does not it make more sense to compare the enlarged EU with NAFTA?" I suppose that one could make that comparison, although statistics about GDP per hour in the NAFTA region wouldn't interest ME very much. It's never clear whether the US should be compared with the Eurozone, EU-15, EU-27, etc. The comparison will never be perfect! However, the Conference Board seemed to think it was appropriate to compare US labor productivity growth (1.4%) to enlarged EU labor productivity growth (1.5%), and the Financial Times article that you originally linked interpreted this as US "growth in output per hour worked falling behind the EU." As I see it, the "anonymous professor" was really just responding to a comparison that had already been made elsewhere, and trying to put it into a more meaningful context. I still doubt that the labor productivity growth in the Eurozone or the EU-15 was any higher than the US. I haven't had time to compute the actual numbers, but I did look at some of the data. The 12 newest EU countries have been improving their labor productivity a lot in the last few years! However, when we look at the EU-15 countries, although some are showing strong improvement, others are lagging so much that I doubt that overall EU-15 labor productivity growth is even as high as 1.4%.

Potsdam Amerikanerin on :

Okay, I answered one question. The numbers that I posted above included Greece (but not Slovenia) in the Eurozone. Note that using this convention (which the OECD also uses), the US had higher labor productivity in 1995, and in every year since. However, when the 1995 Eurozone labor productivity is calculated without including Greece, then it was about 1% higher than the US, as the Deutsche Bank graph shows (but the US productivity was higher in every year since).

JW-Atlantic Review on :

@ Potsdam Amerikanerin "the overall conclusions of the Deutsche Bank Report are not quite as cheerful" I know, but the post would get too long, if I would make this about demographics as well. This post already deals with trade deficits... Demographic changes in Europe provide bigger challenges than the US trade deficits, but still... The professor you link to describes the US economy as "fabulous" but complains that "that fact rarely penetrates the collective psyche of either Americans or Europeans." Why do Europeans have to be in love with the US economy? Sure, there are some very positive facts, about the US economy, but there is also some data that contradicts the fabulous assessment. After all, his cheerful assessment does not just refer to productivity or growth, but to the entire economy. There are millions of Americans, who work their asses of and don't think that the US economy is "fabulous." "Fabulous" is # based on or told of in traditional stories; lacking factual basis or historical validity; "mythical centaurs"; "the fabulous unicorn" # barely credible; "the fabulous endurance of a marathon runner" So..., when this professor describes the US economy as fabulous, then he/she seems to be talking about a myth... Sorry, I could not resist this. ;-) Increasing productivity is the key to dealing with a shrinking and aging population. Germany and others have finally increased productivity a bit after many years of hardly any growth. That's good news. Is it enough? No. Are we jumping up and down and slap on our back boasting that America is doing terribly? I don't think so, but that seems to have been the impression by this anonymous professor you link to. IMHO he/she is overreacting to that FT post and read all kinds of staff into it. Every little statistic that indicates that America has not been the very best country in the whole universe last year seems to be seen by many anonymous bloggers as some kind of Anti-American plot by the evil media. Anyway, I guess I am overreacting to him/her as well now.

JW-Atlantic Review on :

Okay, I admit the Financial Times article was not the best since it lacked specific data and context and had a sensational headline.

Potsdam Amerikanerin on :

fab·u·lous (via dictionary.com) 1. almost impossible to believe; incredible. 2. [i]Informal.[/i] exceptionally good or unusual; marvelous; superb: a fabulous bargain; a fabulous new house. "There are millions of Americans, who work their asses of and don't think that the US economy is "fabulous"." There are millions of Germans, who sit around on their asses all day collecting social benefits and don't think that the economy is "fabulous". So? "Anyway, I guess I am overreacting to him/her as well now." Yes, perhaps. It's not a very good habit, since it tends to decrease the quality of discourse all around. (I tried to write a polite response to your remarks, but this was as close as I could get, considering my own irritation.) Okay, I'm sorry about the sarcasm, but yet not sorry enough to delete it. However, as a peace offering, I'll end this with one more good link to [url=http://andrewhammel.typepad.com/german_joys/2005/11/voluntary_and_i.html]some very insightful discussion about the differences between US and European labor markets a while ago at German Joys[/url].

JW-Atlantic Review on :

[i]"There are millions of Americans, who work their asses of and don't think that the US economy is "fabulous"." There are millions of Germans, who sit around on their asses all day collecting social benefits and don't think that the economy is "fabulous". So?[/i] So? The difference is: a) I am not describing Germany's economy as "fabulous." b) I don't know any German professor of economics, who describes the German economy as "fabulous." If anyone would do that, I would react the same way as I have reacted to this prof's statements. Check my previous posts on the German economy, if you like, for instance: [url]http://atlanticreview.org/archives/503-Germanys-Economic-Problems.html[/url] [url]http://atlanticreview.org/archives/542-Germany-in-Numbers.html[/url] or the Endnote here: [url]http://atlanticreview.org/archives/534-Dollar-versus-Euro.html[/url] Offtopic: Would you like to contribute to the new project in our sidebar "Tips From Our Readers." [url]http://atlanticreview.org/archives/595-Trusted-Readers-Make-the-Atlantic-Review-More-Interesting-and-Faster.html[/url] Any suggestions to make it more interesting and relevant?

Potsdam Amerikanerin on :

I don't know who the anonymous professor is, but he/she stated at some point, "I'm not an economist, but analyzing data is my strong suit," and I see no reason to doubt that. It's just one person's point of view... nothing more. But the graphs are quite interesting... Don't you agree? Your new "Tips From Our Readers" project sounds like a great idea, but I'm really busy right at the moment. Maybe later. If I do find some time, I'd rather take another look at those Labor Productivity statistics. Well, I have little desire to play with Excel spreadsheets, but I do want to know if my suspicion is correct (that the "labor productivity growth rate" for EU-27 was the ONLY statistic which compared favorably to the US). If I do, I'll post the results here either way. (If there's any other reader who does like to mess around with spreadsheets, I'd be quite happy to let someone else do the calculations.)

JW-Atlantic Review on :

[i]if my suspicion is correct (that the "labor productivity growth rate" for EU-27 was the ONLY statistic which compared favorably to the US).[/i] How about inflation and foreign trade balance? I don't have EU-27 statistics, but some trade statistics on Germany are mentioned in the post. Deficit spending in EU-15 is currently lower than in the US, as pointed out in an earlier comment. Or how about social mobility? [url=http://www.americanprogress.org/atf/cf/%7BE9245FE4-9A2B-43C7-A521-5D6FF2E06E03%7D/HERTZ_MOBILITY_ANALYSIS.PDF]Tom Hertz, Assistant Professor of Economics at The American University[/url]: "By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States." I don't know enough have an opinion about it. Perhaps someone who has a better understanding of economics than I do, will answer some of your questions. [i]Your new "Tips From Our Readers" project sounds like a great idea, but I'm really busy right at the moment. Maybe later.[/i] Anytime!!! It's not supposed to make more work. If you don't want to sign up with del.icio.us, just send me an email whenever you stumble across something relevant. Thanks.

Potsdam Amerikanerin on :

[i]if my suspicion is correct (that the "labor productivity growth rate" for EU-27 was the ONLY statistic which compared favorably to the US).[/i] Obviously, I was referring to statistics which can be obtained from the Conference Board's "Total Economy Database" (the source for the original article), which includes data about population, number of employed people, annual hours worked per employee, and GDP.

Don S on :

One of the more interesting graphs in the link to Deutsche Bank which Potsdam Amerikanerin pprovided was the graph of labor force as a percent of population. The French are at about 42% (and the EMU at 45%) whilst the US is at 48.5%. Given that children are mostly not in the labor force and that the US probably has more children as a proportion of population, this reveals something interesting about the EMU. There are a lot of adults not participating in the labor force - or at least not recorded in official statistics. This is particularly true in France, which is 3% lower than the EMU average. The anomanoly extends to the graph showing hours worked per capita, with France at 600 hours per-capita per year versus an EMU average of 700 and the US and Japan being around 900. I believe the high French labor productivity figure may be a result of the 10-15% least productive parts of the French workforce not being employed or being employed on the grey market and not counted in official figures.

Pat Patterson on :

And that German who lives one year longer than the American will notice that there are 54 retirees per 100 in Germany vs. 35 per 100 in the US. I'm wondering which retiree is going to feel more secure?

Don S on :

I wonder how much these statistics catch of the informal sector: i.e. the black market? Not much I'd guess. But the black market seems to be of considerable importance, particulely in France, Italy, and Spain. I think the high French productivity may reflect the fact that the French statistics do not measure the informal sector, who may be the least productive workers in French society. I see no reason why French workers would be more productive than their German counterparts.

ADMIN on :

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Potsdam Amerikanerin on :

Here is a direct comparison (using numbers from [url=http://www.ggdc.net/dseries/totecon.html]the Conference Board's database[/url]) of labor productivity in the US, the countries in the Eurozone, and the EU of various sizes. Labor productivity (GDP per hour using 2006 US dollars) Year___US_____Euro____EU-15___EU-25__EU-27 1989___36.59___34.79___34.06___29.71___28.27 1990___37.16___35.47___34.64___30.33___28.83 1991___37.58___35.79___35.08___30.81___29.28 1992___38.75___36.75___36.12___31.88___30.32 1993___38.84___37.32___36.84___32.56___31.00 1994___39.15___38.45___37.96___33.40___31.66 1995___39.14___39.32___38.75___34.17___32.56 1996___40.06___39.73___39.25___34.68___33.00 1997___40.62___40.62___40.09___35.44___33.76 1998___41.38___41.11___40.61___36.01___34.34 1999___42.34___41.66___41.19___36.80___35.13 2000___43.81___42.67___42.27___37.92___36.20 2001___44.64___43.06___42.66___38.51___36.80 2002___45.96___43.55___43.27___39.18___37.42 2003___47.54___43.78___43.66___39.66___37.89 2004___48.72___44.28___44.30___40.34___38.56 2005___49.61___44.61___44.68___40.67___38.89 2006___50.32___45.10___45.24___41.23___39.49 Note that although labor productivity in the US and in the Eurozone are pretty comparable, US productivity has been growing at a faster rate in each year since 1997 (as shown in the table below). Not surprisingly, we also see that each expansion of the EU introduces countries whose average productivity is less than that of the countries already in the EU (thereby reducing the labor productivity overall). It seems a bit overly optimistic to claim that the EU is catching up with the United States. It would be more accurate to say that the labor productivity of the enlarged EU is catching up with the productivity that the smaller EU-15 had before the expansion. Productivity growth (percent improvement over the preceding year) Year___US______Euro____EU-15___EU-25___EU-27 1990___1.55%___1.91%___1.68%___2.04%___1.94% 1991___1.10%___0.90%___1.26%___1.54%___1.54% 1992___3.03%___2.59%___2.86%___3.36%___3.44% 1993___0.23%___1.53%___1.95%___2.11%___2.19% 1994___0.78%___2.96%___2.95%___2.50%___2.09% 1995___-0.02%__2.20%___2.04%___2.25%___2.76% 1996___2.29%___1.04%___1.29%___1.47%___1.34% 1997___1.40%___2.20%___2.09%___2.15%___2.23% 1998___1.83%___1.18%___1.28%___1.60%___1.70% 1999___2.27%___1.32%___1.41%___2.14%___2.24% 2000___3.35%___2.37%___2.54%___2.94%___2.96% 2001___1.87%___0.90%___0.92%___1.55%___1.64% 2002___2.86%___1.12%___1.41%___1.71%___1.65% 2003___3.34%___0.53%___0.91%___1.21%___1.25% 2004___2.42%___1.12%___1.44%___1.67%___1.72% 2005___1.79%___0.74%___0.84%___0.82%___0.86% 2006___1.40%___1.09%___1.24%___1.36%___1.50% It certainly looks like my suspicion was true: When the Conference Board chose to highlight the fact that productivity growth in the enlarged EU exceeded US productivity growth, [b]they selected the only statistic obtainable from their entire "Total Economy Database" which compares the EU favorably to the US[/b].

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