EL PACIENTE FRENTE AL CONSENTIMIENTO INFORMADO

Increases in the supply of highly educated and more experienced workers have the potential to contribute positively to economic growth. Standard measures of labour input, such as total hours worked, ignore these changes in the composition of the workforce, typically leading to an underestimation of the contribution of labour to growth (see OECD, 2001). This box presents estimates of the trend in labour quality growth for the euro area and euro area countries. The estimates of labour quality are constructed in two steps. In a fi rst step, microdata are used to derive weights for a number of worker groups with different characteristics. These weights refl ect differences in productivity (measured by estimated relative wages ²) across workers groups, e.g.

those with university level education or more are on average more productive than those with primary education and are thus given a larger weight. In a second step, these weights are used to adjust data on total hours worked by worker-country groups to arrive at an index of labour-quality-adjusted labour input. Labour quality growth is estimated as the difference between

1 Prepared by J. Turunen.

2 More specifi cally, time-varying weights are derived from predicted wages from cross-section regressions of individuals’ wages on their human capital characteristics such as education and labour market experience (as proxied by age).

Table 11 Educational Attainment of Population and PISA scores, 2006

(% of total population by highest level of education attained; Pisa score)

Country 2006 PISA 2006 PISA

Low 2006 Education

Medium Education

High Education

Profi ciency in Reading

Profi ciency in Maths

Profi ciency in Science

Percentage 30-54 year old population Average Score Total

Belgium 30.9 36.4 32.6 501 520 510 1531

Germany 15.0 59.3 25.7 495 504 516 1515

Ireland 31.7 37.1 31.2 517 501 508 1526

Greece 37.2 39.3 23.5 460 459 473 1392

Spain 48.3 22.3 29.4 461 480 488 1429

France 31.1 42.9 26.0 488 496 495 1479

Italy 46.1 40.5 13.4 469 462 475 1406

Luxembourg 34.0 41.6 24.4 479 490 486 1455

Netherlands 25.3 43.7 31.0 507 531 525 1563

Austria 18.4 63.0 18.7 490 505 511 1506

Portugal 72.1 14.2 13.7 472 466 474 1412

Slovenia 17.7 60.4 22.0 494 504 519 1517

Finland 15.6 45.8 38.7 547 548 563 1658

Euro area 32.8 43.1 24.1 491 497 503 1491

Denmark 17.1 46.3 36.6 494 513 496 1503

Sweden 12.6 56.3 31.1 507 502 503 1512

United Kingdom 27.2 41.7 31.1 495 495 515 1505

Sources: Educational attainment data are from Eurostat, LFS and ECB calculations. PISA data are from the OECD.

LABOUR SUPPLY

quality-adjusted and raw total hours worked. Estimates of labour quality growth are based on a number of assumptions and data sources and should thus be interpreted with great caution.³ Focussing on the period 1992-2005, estimates in Schwerdt and Turunen (2007) suggest that euro area labour quality has grown on average by 0.48% year-on-year. Relatively strong labour quality growth in most of the 1990s, driven by an increase in the share of those with tertiary education and workers in prime age (35-54 years of age), was followed by lower labour quality growth towards the end of the 1990s, possibly refl ecting the impact of robust employment growth resulting in the entry of workers with lower skills. The euro area estimate of labour quality growth refl ects substantial diversity across individual countries for which reliable estimates are available, with estimates ranging from the lowest in Finland (0.18%) to the highest in Spain (0.84%) (see Chart A). In line with other studies (see, e.g. Jorgenson, 2005, for the G7 countries), the rise in the average level of educational attainment is the main driver of the increase in labour quality over time, with a consistent relative contribution to labour quality growth also across euro area countries. Chart A shows that overall labour quality growth has signifi cantly benefi ted from increasing shares of highly educated employees in countries like Spain, Ireland and Austria. Other countries, such as Finland and Germany, do not show such signifi cant increases in the share of highly educated employees and, consequently, have lower

3 In particular, estimates of labour quality growth are based on the key assumption that relative marginal products of worker types are refl ected in their relative wage rates. Various characteristics of labour markets, such as discrimination, union bargaining, signalling and mismatch, may result in violations of this assumption. However, due to a lack of more direct measures, wages remain the best available proxy of worker productivity. Furthermore, individual labour market experience is not directly observable in available household data.

Therefore, as is standard in the literature, age is used to proxy labour market experience. The weights are derived separately for men and women, allowing e.g. for the age-earnings profi les to differ across gender. Levenson and Zoghi (2007) construct labour quality growth estimates for the US based on birth-imputed experience measures and age and fi nd that using age results in a slightly lower estimates of labour quality growth. Schwerdt and Turunen (2007) use detailed information from the European Community Household Panel (ECHP) and the LFS on total hours worked and wages by worker groups along four dimensions − age (6 groups), education (3), gender (2) and (for the euro area estimates) country (12) − to construct estimates of labour quality growth. For a more detailed description of the data and methodology, see Schwerdt and Turunen (2007). Because of the reclassifi cation of education categories in the LFS that occurred in the late 1990s and other breaks, estimates for country-years in which at least a 5% jump in an underlying share of total hours worked within a single education category is observed (1998 in Ireland, 1998 in Finland, 1999 in Austria and 2004 in Greece) are excluded from the calculation of time period averages shown in this box.

Chart A Labour quality growth and the contribution of education

(average annual growth rate in 1992-2005; percent)

Germany x-axis: growth in labour quality

y-axis: 1^st order contribution of education

Source: ECB calculations based on estimates in Schwerdt and Turunen (2007).

Chart B Labour quality growth over time in the euro area

(annual growth rate; percent; 1992 to 2005)

0.0

1992 1994 1996 1998 2000 2002 2004 2006 Source: ECB calculations based on estimates in Schwerdt and Turunen (2007).

fi rst-order contributions from education to labour quality growth over this time period. Overall, these country results are broadly consistent with estimates from other studies.⁴

Chart B shows the growth in labour quality in the euro area since 1992. Looking forward, owing to the ageing of the euro area population, the relative share of (the most productive) workers of prime-age is likely to decline, putting downward pressure on growth in euro area labour quality in the coming 10-15 years. This effect poses an additional challenge for sustaining labour productivity growth in the euro area.

4 See Jorgenson (2005) for estimates for Germany, France and Italy; Card and Freeman, (2004) for Germany; Melka and Nayman (2004) for France; Brandolini and Cipollone (2001) for Italy; Inklaar et al. (2005) for the EU4 (Germany, France, the Netherlands and the United Kingdom) and EU-KLEMS for a number of European countries (see www.euklems.net).

POLICIES AND