The low productivity of European firms: how can policies enhance the allocation of resources?

Economists take total factor productivity (TFP) as one of the most informative indicators of the state of a country's economy.

Publishing date: 25 April 2022
Authors: Grégory Claeys Giovanni Sgaravatti Marie Le Mouel

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This Working Paper is an output from the MICROPROD project, which received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 822390.

This paper summarises the most important policy lessons from the research undertaken in the MICROPROD project, work package 4, related to the allocation of the factors of production, with a special focus on the weak dynamism of European small and medium-sized enterprises (SMEs).

In particular, MICROPROD work package 4 investigated the impact of labour market institutions and skill shortages on firm dynamism, and which types of (foreign) competition are conducive for total factor productivity (TFP) maximizing factor allocation.

The papers of this work package also explored the side effects of unconventional monetary policy and of forbearance in bank restructuring for the survival of ‘zombie’ firms, and for employment growth and the TFP of new SMEs.

Recommended citation

Claeys, G., M. Le Mouel and G. Sgaravatti (2022) ‘The low productivity of European firms: how can policies enhance the allocation of resources?’, Working Paper 06/2022, Bruegel

About the authors

Grégory Claeys

Grégory Claeys, a French and Spanish citizen, joined Bruegel as a research fellow in February 2014, before being appointed senior fellow in April 2020.

Grégory Claeys is currently on leave for public service, serving as Director of the Economics Department of France Stratégie, the think tank and policy planning institution of the French government, since November 2023.

Grégory’s research interests include international macroeconomics and finance, central banking and European governance. From 2006 to 2009 Grégory worked as a macroeconomist in the Economic Research Department of the French bank Crédit Agricole. Prior to joining Bruegel he also conducted research in several capacities, including as a visiting researcher in the Financial Research Department of the Central Bank of Chile in Santiago, and in the Economic Department of the French Embassy in Chicago. Grégory is also an Associate Professor at the Conservatoire National des Arts et Métiers in Paris where he is teaching macroeconomics in the Master of Finance. He previously taught undergraduate macroeconomics at Sciences Po in Paris.

He holds a PhD in Economics from the European University Institute (Florence), an MSc in economics from Paris X University and an MSc in management from HEC (Paris).

Grégory is fluent in English, French and Spanish.
Giovanni Sgaravatti

Giovanni works at Bruegel as an Energy and climate research analyst. He studied Economics (BSc) at University of Venice - Ca’ Foscari - including one semester at the University of Melbourne, and holds a Master’s degree in Quantitative Economics obtained in Venice - having done the whole second year at the Economics School of Louvain.

Before joining Bruegel Giovanni worked in the Productivity branch of the Office for National Statistics in the United Kingdom. As a trainee he worked at the Delegation of the European Union to Chile and at BusinessEurope. His fields of analysis span from productivity to energy and climate change.

Giovanni is an Italian native speaker, is fluent in English and has good working knowledge of French and Spanish.
Marie Le Mouel

Marie Le Mouel joined Bruegel in September 2021 as an Affiliate Fellow on the macroeconomics of decarbonization until July 2023. Her work aims at understanding the economic transformations that will accompany a transition to net-zero emissions, and at proposing a policy framework that ensures an efficient and socially just transition.

Prior to joining Bruegel, she did a post-doc at Tilburg University, where she worked on the effect of innovation on productivity growth and on technical standard-setting. She maintains her affiliation with the Tilburg Law and Economics Centre (TILEC) and continues to teach economic growth in the Masters of Economics. She also has prior experience at the OECD, estimating the value and growth potential of investments in intangible assets.

She holds a Ph.D. in Economics from the DIW Berlin and Technical University Berlin, a M.A. in Economics and Public Policy from Sciences Po Paris and Ecole Polytechnique and a B.A. in Philosophy, Politics and Economics from Oxford University.

Marie is fluent in French and English, and has knowledge of Spanish, German and Dutch.