The café economy: structural transformation in Greece in the wake of austerity and “reforms”

Abstract This paper investigates the structural transformation of the Greek economy over the past 15 years, focusing on the increasing dominance of the Accommodation and Food Service Activities (AFSA) sector in the aftermath of austerity and structural reforms. Despite promises of productivity gains through labor market and product market reforms, the Greek economy has experienced a sharp decline in labor productivity and a significant reallocation of employment toward low-productivity sectors, especially AFSA, reminiscent of a Lewis-type dual sector economy. The experience of the Greek economy also supports theories of technological change that emphasize output growth and the cost of labor as fundamental determinants of productivity growth.