Productivity and employment—Is there a trade-off? Comparing Western European regions and American states 1950–2000

Abstract

This article report findings from a new dataset that consists of productivity and employment variables from 89 Western European regions and 51 American states and districts from 1950 to 2000. Distribution dynamics is used to investigate convergence in labor productivity, Gross Value Added (GVA) per capita, and employment ratios. Main findings are that European labor productivity and GVA per capita have converged more or less continuously since 1950, but that the European employment ratios show divergence after 1970. Compared to US, the European regions have faced an employment-productivity trade-off since the 1970s. This trade-off appears to be related to country-specific factors.