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The French productivity puzzle

Author

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  • Philippe Askenazy

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Christine Erhel

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé)

Abstract
Since 2008, France experiences a sharp productivity slowdown. Both output per hour and total factor productivity are particularly deceptive in the market economy. This recent trend contrasts with the acceleration of productivity during the previous crisis in the 1990's and the continuous increase during the following decade. This text provides the first comprehensive exploration of this puzzling break. The direct impacts of the Great Recession on industry composition or reallocation of capital are not significant suspects for a slowdown occurring across business activities. Labour market mechanisms are better candidates. On the one hand, the French labour market policy has massively boosted the creation of low-productive jobs including very-short term employees and self-employed workers. On the other hand, firms, which benefit from massive tax cuts, have hoarded their high-skilled workforce. In addition, the spread of innovative HRM incentives, e.g. employee shareholding, seems to have turned productivity more sensitive to the business cycle (and especially to the fall of stock markets).
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Suggested Citation

  • Philippe Askenazy & Christine Erhel, 2016. "The French productivity puzzle," Post-Print halshs-01300987, HAL.
  • Handle: RePEc:hal:journl:halshs-01300987
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    References listed on IDEAS

    as
    1. Ronald B. Davies & Julien Martin & Mathieu Parenti & Farid Toubal, 2018. "Knocking on Tax Haven’s Door: Multinational Firms and Transfer Pricing," The Review of Economics and Statistics, MIT Press, vol. 100(1), pages 120-134, March.
    2. Philippe Aghion & Philippe Askenazy & Nicolas Berman & Gilbert Cette & Laurent Eymard, 2012. "Credit Constraints And The Cyclicality Of R&D Investment: Evidence From France," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1001-1024, October.
    3. Nicholas Bloom, 2009. "The Impact of Uncertainty Shocks," Econometrica, Econometric Society, vol. 77(3), pages 623-685, May.
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    5. Askenazy, Philippe & Erhel, Christine, 2015. "The French Productivity Puzzle," IZA Discussion Papers 9188, Institute of Labor Economics (IZA).
    6. Chevalier, Paul-Antoine & Lecat, Rémy & Oulton, Nicholas, 2012. "Convergence of firm-level productivity, globalisation and information technology: Evidence from France," Economics Letters, Elsevier, vol. 116(2), pages 244-246.
    7. Philippe Askenazy & Lutz Bellmann & Alex Bryson & Eva Moreno Galbis, 2016. "Productivity Puzzles Across Europe," PSE-Ecole d'économie de Paris (Postprint) halshs-01379283, HAL.
    8. Eve Caroli & Jérôme Gautié, 2008. "Low wage work in France," PSE-Ecole d'économie de Paris (Postprint) hal-00266332, HAL.
    9. Laura Hospido & Eva Moreno-Galbis, 2015. "The Spanish productivity puzzle in the Great Recession," Working Papers 1501, Banco de España.
    10. Philippe Askenazy & Christine Erhel, 2015. "Productivity Puzzles in France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01297703, HAL.
    11. Moreno-Galbis, Eva & Sopraseuth, Thepthida, 2014. "Job polarization in aging economies," Labour Economics, Elsevier, vol. 27(C), pages 44-55.
    12. Luc Arrondel & André Masson, 2011. "L'épargnant dans un monde en crise : ce qui a changé," Post-Print halshs-00654662, HAL.
    13. Bloom, Nicholas & Van Reenen, John, 2011. "Human Resource Management and Productivity," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 19, pages 1697-1767, Elsevier.
    14. Askenazy, Philippe, 2013. "Capital Prices and Eurozone Competitiveness Differentials," CEPREMAP Working Papers (Docweb) 1301, CEPREMAP.
    15. Philippe Askenazy & Christine Erhel, 2015. "Okun’s Laws Differentiated by Education," PSE Working Papers hal-01297704, HAL.
    16. Philippe Aghion & Philippe Askenazy & Nicolas Berman & Gilberte Cette & Laurent Eymard, 2012. "Credit Constraints and the Cyclicality of R&D Investment: Evidence from Micro Panel data," PSE-Ecole d'économie de Paris (Postprint) halshs-00754573, HAL.
    17. Alina Barnett & Ben Broadbent & Adrian Chiu & Jeremy Franklin & Helen Miller, 2014. "Impaired Capital Reallocation and Productivity," National Institute Economic Review, National Institute of Economic and Social Research, vol. 228(1), pages 35-48, May.
    18. Haskel, Jonathan & Iommi, Massimiliano, 2012. "Intangible Capital and Growth in Advanced Economies: Measurement and Comparative Results," CEPR Discussion Papers 9061, C.E.P.R. Discussion Papers.
    19. repec:dau:papers:123456789/7001 is not listed on IDEAS
    20. Moreno-Galbis, Eva & Sopraseuth, Thepthida, 2014. "Job polarization in aging economies," Labour Economics, Elsevier, vol. 27(C), pages 44-55.
    21. Gonthier, Pauline, 2012. "Why Was Short-Time Work Unattractive During the Crisis?," Institute for Research on Labor and Employment, Working Paper Series qt5dn0w9b1, Institute of Industrial Relations, UC Berkeley.
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    Cited by:

    1. Askenazy, Philippe & Erhel, Christine, 2015. "The French Productivity Puzzle," IZA Discussion Papers 9188, Institute of Labor Economics (IZA).
    2. Thomas Amossé & Philippe Askenazy & Martin Chevalier & Christine Erhel & Héloïse Petit & Antoine Rebérioux, 2016. "Industrial Relations and Firms’ Reactions to the Recession: A Comparative Micro-Econometric Analysis of France and Great Britain [Relations sociales et ajustements à la crise : une analyse micro-st," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02172455, HAL.
    3. Bart van Ark & Kirsten Jäger, 2017. "Recent Trends in Europe's Output and Productivity Growth Performance at the Sector Level, 2002-2015," International Productivity Monitor, Centre for the Study of Living Standards, vol. 33, pages 8-23, Fall.
    4. V. Bignon & F. Boissay & C. Cahn & L.-M. Harpedanne de Belleville, 2016. "Extended eligibility of credit claims for Eurosystem refinancing Consequences for the supply of credit to companies," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 15-23, Autumn.
    5. Alex Bryson & Michael White, 2019. "Migrants and Low-Paid Employment in British Workplaces," Work, Employment & Society, British Sociological Association, vol. 33(5), pages 759-776, October.
    6. Thomas Grjebine & Jérôme Hericourt & Fabien Tripier, 2019. "Sectoral Reallocations, Real Estate Shocks and Productivity Divergence in Europe: A Tale of Three Countries," Post-Print hal-02501079, HAL.
    7. Philippe Askenazy & Christine Erhel, 2017. "La productivité du travail en déclin : quels liens avec les transformations du marché du travail ?," Post-Print hal-02138346, HAL.
    8. Liis Roosaar & Urmas Varblane & Jaan Masso, 2020. "Productivity Gains From Labour Churning In Economic Crisis: Do Foreign Firms Gain More?," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 125, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    9. Peter Bauer & Igor Fedotenkov & Aurelien Genty & Issam Hallak & Peter Harasztosi & David Martinez Turegano & David Nguyen & Nadir Preziosi & Ana Rincon-Aznar & Miguel Sanchez Martinez, 2020. "Productivity in Europe: Trends and drivers in a service-based economy," JRC Research Reports JRC119785, Joint Research Centre.
    10. Thomas Grjebine & Jérôme Héricourt & Fabien Tripier, 2023. "Sectoral reallocations, real estate shocks, and productivity divergence in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(1), pages 101-132, February.
    11. A. Berthou, 2016. "Current account adjustments and productivity dynamics in Europe during the crisis," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 59-70, Autumn.
    12. Werner Eichhorst & Paul Marx, 2021. "How stable is labour market dualism? Reforms of employment protection in nine European countries," European Journal of Industrial Relations, , vol. 27(1), pages 93-110, March.
    13. Philippe Askenazy & Christine Erhel, 2015. "Okun’s Laws Differentiated by Education," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01297704, HAL.
    14. C. Guette-Khiter, 2016. "Non-resident holdings of French CAC 40 companies at end-2015," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 35-46, Autumn.
    15. Christine Erhel & Mathilde Guergoat-Larivière, 2016. "Innovations and job quality regimes: a joint typology for the EU," Working Papers hal-01907472, HAL.
    16. Gilbert Cette & Simon Corde & Rémy Lecat, 2017. "Stagnation of productivity in France: A legacy of the crisis or a structural slowdown?," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 494-495-4, pages 11-36.
    17. Christine Erhel & Mathilde Guergoat-Larivière, 2016. "Innovations and job quality regimes: a joint typology for the EU," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01907472, HAL.
    18. J. Morenas & B. Rudelle, 2016. "Money and its counterparts in France and in the euro area," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 25-34, Autumn.
    19. John Fernald, 2018. "Cyclical Downturn or Slowing Trend? A Review Article on Productivity Puzzles across Europe," International Productivity Monitor, Centre for the Study of Living Standards, vol. 34, pages 110-117, Spring.
    20. R. Cezar, 2016. "France’s trade integration measured in value added," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 47-58, Autumn.
    21. V. Grossmann-Wirth & M. Vari, 2016. "Exiting low interest rates in a situation of excess liquidity: the experience of the Fed," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 5-14, Autumn.
    22. Catherine Bruneau & Pierre-Luis Girard, 2021. "Labor Productivity in France: Is the Slowdown of its Growth Inevitable or are there Levers to fight it?," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 7(1), pages 9-40, January.
    23. Guillaume Cléaud & Francisco de Castro Fernández & Jorge Durán Laguna & Lucia Granelli & Martin Hallet & Anne Jaubertie & Carlos Maravall Rodriguez & Diana Ognyanova & Balazs Palvolgyi & Tsvetan Tsali, 2019. "Cruising at Different Speeds: Similarities and Divergences between the German and the French Economies," European Economy - Discussion Papers 103, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    24. Askenazy, Philippe & Palier, Bruno, 2018. "France: rising precariousness supported by the welfare state," CEPREMAP Working Papers (Docweb) 1801, CEPREMAP.

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    More about this item

    Keywords

    productivity; labour market; France;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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