2003/06 LEM Working Paper Series

How Provincial is your Region? Effects on Labour Productivity in Europe  

Alfonso Gambardella, Myriam Mariani and Salvatore Torrisi  
Openness, labour productivity, agglomeration economies, technology, European regions.

  JEL Classifications
O18, O30, O47, R11

This paper estimates the determinants of labour productivity in European NUTS regions during 1989-1996. We compare three potential explanations of regional advantages: Technological capabilities (proxied by regional patents), agglomeration economies (employment density), and openness. To study the latter we use the number of airplane passengers embarked and disembarked in the region, and found that this is a meaningful index for the openness of the regions. By using instrumental variables, we confirm existing results that patents and employment density affect labour productivity. Our novel finding is that openness affects labour productivity as well.

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