Tangible investment and labour productivity: Evidence from European manufacturing

Labour productivity is one of the key drivers for higher earnings and welfare standards in every economy. The problem of how to ensure the growth of labour productivity is especially relevant to less developed economies and forces justification of the factors affecting sustainable productivity growt...

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Bibliographic Details
Published in:Economic research - Ekonomska istraživanja 2019-01, Vol.32 (1), p.3519-3537
Main Authors: Stundziene, Alina, Saboniene, Asta
Format: Article
Language:English
Subjects:
Assets
Earnings
Economic theory
Europe
investment
Investments
Justification
Labor productivity
labour productivity
Manufacturing
manufacturing industry
Productivity
tangible investment
Welfare
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Summary:Labour productivity is one of the key drivers for higher earnings and welfare standards in every economy. The problem of how to ensure the growth of labour productivity is especially relevant to less developed economies and forces justification of the factors affecting sustainable productivity growth. The purpose of this research is to test if the investment in tangible assets improves labour productivity in the European manufacturing industry and to reveal the countries with inefficient investment. The results show that with consideration of all European countries, a 1% increase in gross investment in tangible goods (G.I.T.G.) per person employed (P.E.) has a 0.0373% long-run effect on apparent labour productivity (A.L.P.). Considering various types of investments in tangibles, only an increase in gross investment in existing buildings and structures (G.I.E.B.S.) per P.E. and gross investment in machinery and equipment (G.I.M.E.) per P.E. caused growth of A.L.P. However, the impact of investment in assets on A.L.P. significantly differs among the countries and it is revealed that many European countries, which are characterised by low productivity, use investment inefficiently.
ISSN:1331-677X
1848-9664
DOI:10.1080/1331677X.2019.1666024