Decarbonisation is the reduction of carbon dioxide emissions using low carbon power sources, lowering output of greenhouse gasses into the atmosphere. This is essential to meet global temperature standards set by international climate agreements. To limit global warming to 1.5°C, hence avoiding the worst-case scenarios predicted by climate science, the world economy must rapidly reduce its emissions and reach climate neutrality within the next three decades. This will not be an easy journey. Shifting away from carbon-intensive production will require a historic transformation of the structure of our economies. Written by a team of academics linked to the European think tank Bruegel, The Macroeconomics of Decarbonisation provides a guide to the macroeconomic fundamentals of decarbonisation. It identifies the major economic transformations, both over the long- and short-run, and the roadblocks requiring policy intervention. It proposes a macroeconomic policy agenda for decarbonisation to achieve the climate goals of the international community.

European economies exhibit the so-called 'productivity puzzle, whereby investments' in digital technologies and intangible assets have not delivered the hoped-for productivity gains. Explanations for this puzzle lie in the unequal ability of companies to make use of these technologies, and resulting patterns of market concentration, productivity divergence and dampened business dynamism. Access to firm-level data is essential to properly understand these rich dynamics. The purpose of the first work package of the MICROPROD project was to improve the firm-level data infrastructure, expand the measurement of intangible assets and enable cross-country analyses of these productivity trends. The MICROPROD researchers developed the Micro Data Infrastructure (MDI), a centralised platform that harmonises access to the firm-level data gathered by national statistical institutes. The data infrastructure developed through this work package offers valuable insights into the evolution of productivity across the European Union and into the effects of digitalisation and globalisation. It can thus generate important evidence for designing policies to support the European Commission's policy objectives, especially for achieving the digital and green transitions. In addition, the research enabled by this data infrastructure and carried out within the context of MICROPROD can provide valuable lessons about the response of European economies to the COVID-19 pandemic and its aftermath.

The rise of online sales and marketplaces poses new challenges to product safety, consumer protection, and unfair business practices. At the same time, e-commerce has the potential to facilitate more sustainable production processes and consumption patterns and ensure more circularity. This study provides information on the role of e-commerce in implementing the European Green Deal and makes recommendations for future action. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Internal Market and Consumer Protection (IMCO).

Understanding the causes of the slowdown in aggregate productivity growth is key to maintaining the competitiveness of advanced economies and ensuring long-term economic prosperity. This paper is the first to provide evidence that investment in Knowledge-Based Capital (KBC), despite having a positive effect on productivity at the micro level, is a driver of the weak productivity performance at the aggregate level, by accentuating divergence between a group of "frontier" firms and the rest of the economy. Using detailed firm-level administrative data for Germany, we find evidence that the effect of KBC on productivity is heterogeneous across firms within industries: this effect is 3 times larger for firms in the top quintile of the KBC distribution compared to firms in the bottom quintile of the KBC distribution. We document the existence of divergence in productivity growth between top KBC users and the rest of firms at the industry level, and find that industries where this gap is larger are also those industries where the heterogeneity in the effect of KBC is highest and where average productivity growth was lower. The evidence hence supports the view that the use of KBC plays a role in explaining weak productivity growth, by accentuating differences between firms.

This work seeks to quantify investment in Organisational Capital (OC) by looking at the task content of occupations. It relies on the literature suggesting OC to be embodied in a firm's workforce and defines OC as those tasks performed by employees - irrespective of their occupational titles - likely to affect a firm's medium to long-term functioning. Using US Occupational Information Network (O*NET) data, it operationalises the task-based definition and identifies 84 occupations, including 22 managerial occupations, performing OC related tasks. Employment and earnings data from the US are used to calculate investment in OC at macro and 2-digit sectoral levels. Estimates suggest that previous measures seemingly underestimated investment in OC at the macro level, and that large sectoral differences exist. Manufacturing shows significant own-account investment in OC relative to the value added it generates. Services appear as larger purchasers of OC from external sources, relative to own-account investment. Building on the insights of the labour mobility literature about the disruptive effect of (voluntary) job separations, this work uses employee tenure and turnover data for the US to obtain sector specific depreciation rates. Estimates mainly range between 10% and 25% and suggest that OC depreciates more slowly than previously assumed.

This work proposes a task-based methodology for the measurement of employment and investment in organisational capital (OC) in 20 OECD countries. It builds on the methodology of Squicciarini and Le Mouel (2012) and uses information from the OECD Programme for the International Assessment of Adult Competencies (PIAAC). OC is defined as firm-specific organisational knowledge resulting from the performance of tasks affecting the long-term functioning of firms, such as developing objectives and strategies; organising, planning and supervising production; and managing human resources. Cross-country heterogeneity in OC-related occupations emerges: while 20 occupational classes of the International Standard Classification of Occupations (ISCO 2008) are on average identified as being OC-related, country-specific values range between 14 (in Korea) and 24 occupations (in Poland). A core group of managerial occupations are consistently identified as OC occupations across countries, whereas differences arise in the selection of professionals and associate professionals in science and engineering, health, education, and business administration. Estimates suggest the share of OC occupations in total employment to amount to 16% on average, with country-specific values that vary between 9.5% (Denmark) and 26% (United Kingdom); and that total investment in OC, as a share of value-added, ranges from 1.4% in the Czech Republic to 3.7% in the United Kingdom, with an average 2.2% across all countries. Managers appear to account for less than half of total employment and investment in OC. Total investment in OC results higher in services than in manufacturing. In the services sector, on average half of investment in OC comes from small firms, while in manufacturing, 45% of investment in OC comes from large firms. Finally, the importance of OC investment in the public sector is investigated. With only few exceptions, investment in OC is higher in the public sector than in the private sector. These estimates of OC investment can be used to analyse its role with respect to skill use and mismatch, its impact on the routinisation of tasks and resulting polarisation of wage distribution, and its role in firms' integration and upgrading along global value chains (GVC).

This study assesses the needs and vulnerabilities of the EU in accessing products containing Critical Raw Materials (CRM) needed for the green and digital transitions in a changing geopolitical context. It provides an overview on the wider situation, as well as a policy context. The study sets out to identify at which stage of the supply chain, ranging from raw materials to final products, the European industrial eco-system is dependent on CRM imports. It reviews the CRM methodology designed by the JRC to identify which materials are critical and require special attention. The current methodology could benefit from an extension of scope, including an assessment of product groups and sectors. A study finds that setting up of EU stockpiling facilities could mitigate supply disruptions of raw materials and components. However, setting up stockpiling facilities would require an effective public-private management.This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Industry, Research and Energy (ITRE).