Productivity and the Regional Employment in Services. Econometric Estimations for Romania

Between 1989 and 2006, in Romania the labour force decreased by about 2.6 mill. persons (with regional differences), but, according to the same general tendency, the labour force in services increased by about 0.5 mill. persons. This occurred in a time when the prices in services increased more rapidly as compared to the ones in the national economy. In the paper, we found that the growth in total income leads to growth of the demand for services, so that the increase rate of services outmarch the amplification of productivity, the end-result being a growth of the employment in that sector. Also, even if in Romanian regions the demand for services is inelastic regarding the total income of the households and the dynamics of productivity in services was lower than the average of the national economy, the positive growth rate of employment in services exceeded the productivity gap between the national economy and the services sector.

Keywords: labour productivity, regional employment, price elasticity and income elasticity of demand for services
JEL Classification: C31, J21, L80, O40, R11