EU Productivity Gap Could Shrink by One-Third if Companies Emulated US Scale

The European Central Bank (ECB) has released research showing that Europe's productivity gap with the US could be significantly reduced if its companies were distributed by size in a similar way to American businesses.

According to the ECB, about one-fifth of EU labour productivity remains below that of the US, but this gap is not solely due to American companies being individually more efficient. The structure of the European corporate economy also plays a significant role.

The research found that large EU enterprises generate roughly twice as much value added per worker as micro-enterprises, benefiting from economies of scale, specialized management, and greater investment in intangible assets.

If Europe had the same distribution of employment between small, medium, and large companies as the US, around one-third of the aggregate EU-US productivity gap would disappear, the ECB estimates.