How does Labour Reallocation Contribute to Productivity Growth?

This publication reviews the literature on the impact of labour force reallocation on productivity. In addition to explaining how labour force reallocation can improve productivity, the report discusses the problems involved in measuring this contribution and the empirical results of studies done to date. One of its findings is that labour force reallocation has made a greater contribution to productivity growth in North America than in Europe. This may be explained by the differences between legislation governing the labour market in the two regions.