Convergence and growth. Labour productivity dynamics in the European Union.

This paper investigates labour productivity dynamics for 1263 regional economies of the European Union during 1991-2007. Despite convergence is usually found to occur conditionally to economy-wide factors, this study reveals a clear process of unconditional convergence for nancial and business-related market services. Indeed this sector is more likely to be characterised by standardized technologies of production. Such an evidence is not found for manufacturing and aggregate productivity, for which long run distribution dynamics are characterized by bimodality. The decomposition of the growth rate of aggregate labour productivity reveals that pure productivity gains drive growth. Structural change plays a minor role in the process, however it halves the contribution of the manufacturing sector for the richest regions, while it enhances the weight of nancial market services.