Work absence is a part of an individual’s decision concerning hours worked. This paper focuses on sickness absence in Europe and builds on an analytical framework in which absence enters both labor supply and demand considerations, with sickness insurance provisions and labor market institutions affecting the costs of absence. The results from a panel of 18 European countries indicate that absence is higher under generous insurance systems and where employers bear little responsibility for their costs. Shorter working hours reduce absence, but flexible working arrangements are preferable if labor supply erosion is a concern. [JEL C23, I18, I38, J22] IMF Staff Papers (2007) 54, 475–538. doi:10.1057/palgrave.imfsp.9450016 Low and falling labor utilization has been blamed for the lackluster growth performance of many European countries (OECD, 2003). To a large extent, labor supply erosion can be attributed to the decline in working time. In fact, although participation—possibly owing to labor market reforms—has increased in most European countries in the past 20 years, average working time has continued falling, in line with a long-standing Lusine Lusinyan is an economist with the IMF Fiscal Affairs Department. Leo Bonato is a senior economist with the IMF Middle East and Central Asia Department. This paper ha
Total factor productivity (TFP) growth began slowing in the United States in the mid-2000s, before the Great Recession. To many, the main culprit is the fading positive impact of the information technology (IT) revolution that took place in the 1990s. But our estimates of TFP growth across the U.S. states reveal that the slowdown in TFP was quite widespread and not particularly stronger in IT-producing states or in those with a relatively more intensive usage of IT. An alternative explanation offered in this paper is that the slowdown in U.S. TFP growth reflects a loss of efficiency or market dynamism over the last two decades. Indeed, there are large differences in production efficiency across U.S. states, with the states having better educational attainment and greater investment in R&D being closer to the production "frontier."
Wide-ranging structural reforms are underway in Italy, aimed at addressing key bottlenecks in the product and labor markets. Our analysis, based on the IMF's Global Integrated Monetary and Fiscal model (GIMF), attempts to quantify the potential gains to the economy from a comprehensive package of structural reforms. We find that these gains can be sizeable. While in most cases, the reforms go in the right direction, their impact would depend on effective and timely implementation. In some areas, especially in the labor market, reforms would benefit from further strengthening. The priorities should be to strengthen competition in the non-tradable sector and make the labor market more efficient and inclusive, supported by growth-friendly fiscal reforms.
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