The work describes the dynamics of hourly labour productivity in Italy in the 2000-2022 period, compares it with the main euro-area countries and highlights the contribution of total factor productivity and capital intensity. Additionally, the paper analyses the role of the country's production structure and investment trends in determining the dynamics of aggregate labour productivity in the period before the pandemic.
Italy's weak economic growth is a reflection of subdued labour productivity dynamics. The latter cannot be traced back to resource reallocation towards low productivity sectors, but rather to more limited productivity growth across the board than in other countries. The feeble recovery in investment after the financial and sovereign debt crisis may have contributed to such a poor performance, despite the fact that investment in intangibles, closely linked to innovation, has increased consistently since 2000.
