EU Could Close Third of Productivity Gap with US through Larger Firms

The European Central Bank (ECB) has stated that the European Union could close one-third of its productivity gap with the United States if it had more large companies. The ECB staff found that if Europe had the same distribution of large and small firms as the US, the productivity gap would shrink by roughly one-third.

The ECB also pointed out that EU workers produce 20% less output per hour than their US counterparts, according to academic studies. In fact, in 1995, EU workers were almost on an even keel with their American counterparts.

The ECB staff found that large firms are significantly more productive than smaller ones. Companies with at least 250 employees generate an average of €86,800 in value added per worker annually, while firms with fewer than 10 employees produce less than half that amount.