What Drives Labour Productivity Growth: A Case of Regional Economy

Abstract

Labour productivity is a driver of national competitiveness, economic growth, and living standards. Labour productivity of the Russian economy is significantly lower than that of developed countries, and the gap is increasing. Labour productivity for most Russian regions tends to be lower than the average across the country. Those regions, where it is higher than the average, are resource-abundant. This article studies the drivers of regional labour productivity across a particular resource-abundant region and its sectors. We used regional statistical data from the Krasnoyarsk Territory (Krai) statistical service. We evaluated the contribution of labour productivity across industries to the regional average and studied the impact of human capital quality, capital-labour ratio, and multifactorial productivity. Our results showed the predominant contribution of the export-oriented and mining sector to regional labour productivity growth. Moreover, we found that a significant driver was physical capital. A notable result was the increasing impact of multifactor productivity for many sectors