Editor's Overview

THIS 17TH ISSUE OF THE International Productivity Monitor published by the Centre for the Study of Living Standards contains six articles. Topics covered are the effect of labour market regulation on productivity in OECD countries; the relationship between the growth in labour productivity and real wages in Canada; the importance of higher education and market rigidities for the diffusion of information and communications technology (ICT) in OECD countries; the importance of the ICT-producing sector for productivity growth in Finland and Sweden; the appropriate measurement of total factor productivity (TFP) in unstable economies with an application to Argentina; and recent and proposed changes to US National Accounts. It has been argued that certain labour market reforms that increase labour utilisation may at the same time reduce productivity growth. To assess this hypothesis, Andrea Bassanini and Danielle Venn of the OECD investigate the impact of several labour market policies on productivity. At an aggregate level, pro-employment policy reforms can affect productivity indirectly by changing the skills composition of the labour force, or directly by, for example, changing incentives for workers or firms to invest in training, facilitating the movement of resources across industries or improving the quality of job matches. Based on their empirical analysis, the authors conclude that more stringent employment protection legislation and less generous unemployment benefits are likely to reduce measured aggregate labour productivity, while increases in the ratio of the minimum wage to the median wage and additional parental leave appear to increase labour productivity.