Structural change and Europe’s Golden Age

Most of the countries of Western Europe grew at unprecedented rates from the late 1940s until the early 1970s. Another feature of this period was dramatic structural change, as employment shifted from agriculture to manufacturing and services. This paper uses growth accounting to measure the direct contribution of structural change to aggregate productivity growth. The conventional accounting framework is extended and then applied to Western Europe and the USA for the period 1950-1990. The paper quanti¿es the importance of structural change in explaining the Golden Age, the productivity slowdown, and the cross-country variation in post-war growth rates. My interest in the topic of this paper is due to Peter Temin’s excellent Hicks Lecture in Oxford in March 1998. I am also grateful to Bryan Graham, John Muellbauer, Stephen Redding, Xavier Sala-iMartin, Pierre Sicsic, David Vines, and seminar participants in Oxford and Barcelona for helpful comments and discussion. Any errors are my responsibility. Email [email protected]