Frances Ruane (Trinity College Dublin), Ali Ugur

Sources of Productivity Growth in Irish Manufacturing Industry 1991-1999

Overall labour productivity in the Irish manufacturing sector increased by 158 per cent from 1991 to 1999. This growth in labour productivity has coincided with growth in both employment and output levels during the same period, which is significantly different from the results experienced in other European countries. This paper examines the factors that affect the growth of labour productivity in the Irish manufacturing sector using a decomposition analysis utilising plant level data for the period 1991-1999. In order to account for the large presence of foreign firms industry we carry out our analysis for foreign and domestic firms, as well as four different nationality groups of firms separately. Our results show that although within and entry components are the main drivers of average labour productivity growth in all groups, there are marked differences between the size of the effects across the groups. We also carry out our analysis using the OECD four-group classification of sectors and results show that the within-effect contributes most to overall labour productivity growth in all but one sector, namely high-tech sector in which net entry that is mainly driven by entry effect and cross term contribute most which is in line with the findings of other studies in the literature.

Keywords: Labour productivity, decomposition, Irish manufacturing industry

Session: 6c   Room 2002   Category: Productivity 2

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