The Unassuming Economist

From a paper by Michalis Nikiforos, Vlassis Missos, Christos Pierros, and Nikolaos Rodousakis:

“This paper investigates the structural transformation of the Greek economy over the past fifteen
years, focusing on the increasing dominance of the Accommodation and Food Service Activities
(AFSA) sector in the aftermath of austerity and structural reforms. Despite promises of productivity
gains through labor market and product market reforms, the Greek economy has experienced a sharp
decline in labor productivity and a significant reallocation of employment towards low-productivity
sectors, especially AFSA, reminiscent of a Lewis-type dual sector economy. Using a simple Panel-VAR
model we find that declining aggregate demand and real wages were key drivers of this productivity
collapse. Our findings support theories of technological change that emphasize output growth and
the cost of labor as fundamental determinants of productivity growth.”