One of the most important policy goals of the Dutch Ministry of Economic Affairs is of increase labour productivity. From international comparative studies it is well known that The Netherlands is a country with one of the highest labour productivity levels in the world. However, compared to other countries the growth in labour productivity has been rather low in recent years. Until now most studies deal with the analysis of labour productivity at the country level and the regional level is largely neglected. Partly this is due to lack of suitable data. The results of an explorative study show that within the Netherlands there are substantial differences in labour productivity between regions. The next step is to explain these differences.In this paper we will relate the regional differences in labour productivity to the regional economic structure, the level of education, labour cost and the presence of agglomeration effects. The paper will be concluded by a discussion of the implications of the empirical results to policy measures at the national and regional level.