##tarily in part - time or temporary positions. 13 but it is not plausible that those effects could be as dramatic and long - lasting as the “ hysteresis view ” would suggest. since these workers remained attached to the labour market, they represented a broader definition of slack rather than a new category of structurally unemployed workers – and indeed, measuring slack in this way helps explain recent low inflation outcomes 3 / 7 bis central bankers'speeches better. such people, in other words, had been scratched by the crisis, but not necessarily scarred. this is not to say that these scratches are not deep, in particular in economies worst hit by the crisis. as william shakespeare put it, “ he jests at scars that never felt a wound ”. 14 but, as i showed before, current estimates of structural unemployment do indeed confirm that the initial revisions were exaggerating the impact the recession would have on labour force participation. and they might currently exaggerate the impact the current expansion might have on lowering structural unemployment. insofar as it can be reversed by higher demand, this would presumably happen only late in the cycle when the labour market is especially tight. it would be quite a stretch to claim that the euro area has been in such a “ high - pressure economy ” up to now that would explain the recent notable downward revisions in structural unemployment. this is probably true for the economy as a whole. in other words, it may well be that potential growth fell by less than we estimated during the depths of the crisis, and it is rising by less than we believe as the economy strengthens. so both the sudden drop in estimated potential growth in 2009, and the sharp rebound thereafter, are likely to be statistical artefacts, at least to some extent. the relevance of this view for monetary policy makers is corroborated by research from ecb staff, which you can see on my next slide. 15 it finds that a much more constant rate of potential growth, and therefore a larger output gap in recent years, is consistent with recent inflation dynamics. potential output, secular trends and the fourth industrial revolution as i said before, none of this is to say that potential output growth is invariant. in fact, even if we dismiss the sharp revisions to output growth during the crisis years, the chart on the right - hand side still suggests some slowdown in potential growth compared to the pre - crisis period. but rather than being a direct outcome of the crisis, this decline may rather reflect a continuation

and globally successful companies ; it enjoys comparably efficient and effective public services ; it boasts world - class infrastructure ; it maintains advanced education systems and generates internationally competitive top technology. and, at the same time, the contours of what may be called the european social model have remained intact : a well - developed welfare system provides a safety net for the needy ; income inequality is relatively contained, especially when compared to other parts of the world. nevertheless, in a comparative perspective, in the light of the economic growth rates registered in the united states – not to speak of the spectacular growth dynamics in some emerging market economies – the performance of the euro area economy has been rather disappointing. what are the reasons? taking a long - term perspective, and looking beyond the short - term fluctuations of the business cycle, we must examine the fundamental determinants of its potential or long - term economic growth : demographic trends, developments in labour utilisation and productivity and the variety of underlying factors that affect the ability of the european economy to achieve increased efficiency and to create more employment. in order to better understand and assess the relative contribution of these determining factors, it is useful to express, by employing a growth accounting framework, gdp growth in terms of the rates of change in productivity, labour utilisation and population. table 1 shows the extent to which the rates of change in these three variables have contributed to real gdp growth in the euro area and in the united states over the period 1996 - 2005. a number of interesting conclusions emerge from this decomposition of average economic growth. since the mid1990s, euro area real gdp growth has been driven mainly by labour productivity growth as measured by the rate of change in real gdp per hour worked. however, average productivity growth in the united states was significantly higher, by almost one percentage point. us output growth also benefited from faster population growth, which exceeded that of the euro area by 0. 7 of a percentage point. the degree of labour utilisation improved in the euro area and had a positive effect on its growth. in the united states, by contrast, it remained unchanged on average and thus had no impact on growth. the most important determinant of long - term or potential output growth in both the euro area and the united states is labour productivity. in the euro area, however, productivity growth has declined since the early 1980s, and it continued to decline further in the more recent period 1996 - 2005, when it fell, for the first time,