Working Paper: CEPR ID: DP13703
Authors: Roberto Ganau; Andrés Rodríguez-Pose
Abstract: We investigate the extent to which regional institutional quality shapes firm labour productivity in western Europe, using a sample of manufacturing firms from Austria, Belgium, France, Germany, Italy, Portugal and Spain, observed over the period 2009-2014. The results indicate that regional institutional quality positively affects firms' labour productivity and that government effectiveness is the most important institutional determinant of productivity levels. However, how institutions shape labour productivity depends on the type of firm considered. Smaller, less capital endowed and high-tech sectors are three of the types of firms whose productivity is most favourably affected by good and effective institutions at the regional level.
Keywords: Regional institutions; Manufacturing firms; Labour productivity; Western Europe; Cross-country analysis
JEL Codes: C23; D24; H41; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regional institutional quality (R50) | firms' labour productivity (J24) |
| government effectiveness (H11) | firms' labour productivity (J24) |
| institutional quality (L15) | smaller firms' productivity (L25) |
| institutional quality (L15) | low capital-endowed firms' productivity (D29) |
| institutional quality (L15) | high-tech firms' productivity (O49) |