Demand, employment and labour productivity in the European economies

Abstract

This paper represents an explanation of the causes of the deceleration in labour productivity in the European economies in the last few decades. In the first instance, the weakness of domestic demand is what determines that slowing down in productivity. However, the dif-ferences in the (mediocre) rates of productivity growth in the European countries are related to the specific characteristics of their respective labour markets. In this way, in a context of weakness in domestic demand, there is a trade-off between labour productivity and em-ployment growth.