Productivity Growth and Structural Reform in Bulgaria: Restarting the Convergence Engine
May 1, 2012
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Summary
Labor productivity levels in Bulgaria lag well behind that in the EU, weighing on the convergence process. Stronger productivity growth would allow Bulgaria to close the income gap with the EU average more quickly and to alleviate the structural problems in its labor market, reflected in its high long–term and youth unemployment. Our analysis of the drivers of labor productivity suggest that for Bulgaria closing the gap with EU standards in the areas of institutional and infrastructure quality, goods market efficiency, higher education, and innovation would permanently boost productivity growth by a total of 1 percentage point a year. This would be enough to close the income gap with the EU average by 2040, compared to the status quo where it would take an additional 10 years.
Subject: Income, Job creation, Labor, Labor productivity, National accounts, Production, Productivity, Unemployment
Keywords: Bulgaria, convergence-low productivity nexus, Cross-Country Convergence, Economic Growth, Employment, Europe, GDP, Global, Income, income convergence, Job creation, Labor productivity, labor productivity growth, Productivity, productivity driver, productivity gain, productivity level, productivity-enhancing technology, Unemployment, Wages, WP
Pages:
20
Volume:
2012
DOI:
Issue:
131
Series:
Working Paper No. 2012/131
Stock No:
WPIEA2012131
ISBN:
9781475503678
ISSN:
1018-5941
