Is there a trade‑off between productivity and employment?

The impact of productivity on employment remains uncertain, particularly in light of growing concerns regarding potential negative effects of technological progress on labour demand. This report uses harmonised and comparable data from 13 countries spanning the last two decades to comprehensively analyse how productivity growth affects employment dynamics at various levels of aggregation. The study's findings highlight a positive correlation between productivity growth and employment as well as wage growth, both at the firm level and on a broader scale. This outcome arises from counteracting mechanisms and heterogeneous dynamics across different groups of firms. The findings have relevant policy implications: productivity is not just an isolated key economic objective, but well-designed and complementary policies can also help convert technological and organisational change into higher employment and wage growth.