Improvement of overall labor efficiency in Belgium after 2013

The economy becomes more productive when more output is produced for a given amount of inputs (such as capital and labor). One way for productivity, and thus the economy, to grow is by reallocating workers from less to more productive firms. In this way, efficient employment of workers can be used as a tool towards a more flourishing economy. In this briefing, Dinara Alpysbayeva and Stijn Vanormelingen show the evolution of labor allocation efficiency in Belgium between 1996 and 2017. They find that Belgian firms could produce on average €30,000 more added value if they would have optimally adjusted their labor force. This amount greatly declined during recessions and after 2013. It is commonly known that recessions push the least productive firms out of the market. The improved efficiency after 2013 has other causes. One of them is probably, in part, the 2014 Belgian labor market reform, which equalized employment protection for blue- and white-collar workers, increasing notice periods for the first and decreasing them for the latter. Alpysbayeva and Vanormelingen find that the efficiency for white-collar intensive firms improved more than in blue-collar intensive firms after this reform.status: publishe