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International Comparisons Of Labor Costs In Manufacturing

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  • Peter Hooper
  • KathrynA. Larin

Abstract

This paper presents a comparative study of the levels of unit labor costs in the manufacturing sectors of several countries. We begin by surveying earlier estimates of relative productivity and unit labor cost levels and evaluating the various methodologies that have been used in previous studies. Empirical estimates of relative unit labor costs, based on output levels that are translated at purchasing power parity exchange rates, are then presented and compared to earlier estimates. The results show that the relative levels of unit labor costs in the United States and abroad have fluctuated significantly in recent years, due largely to movements in nominal exchange rates. In 1988, unit labor costs in the United States were below the average level of other industrialized countries, but were significantly above the level in a representative newly industrialized country, Korea. Insofar as unit labor costs serve as an indicator of international competitiveness, these results imply that the competitiveness of the U.S. manufacturing sector had improved significantly since 1985, at least with respect to other major industrialized countries.

Suggested Citation

  • Peter Hooper & KathrynA. Larin, 1989. "International Comparisons Of Labor Costs In Manufacturing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 35(4), pages 335-355, December.
    • Handle: RePEc:bla:revinw:v:35:y:1989:i:4:p:335-355
    DOI: 10.1111/j.1475-4991.1989.tb00597.x
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    Cited by:

    1. Peter Hooper & Elizabeth Vranlovich, 1995. "International comparisons of the levels of unit labor costs in manufacturing," International Finance Discussion Papers 527, Board of Governors of the Federal Reserve System (U.S.).
    2. James Harrigan, 1997. "Estimation of Cross-Country Differences in Industry," NBER Working Papers 6121, National Bureau of Economic Research, Inc.
    3. Johannes Van Biesebroeck, 2009. "Disaggregate productivity comparisons: sectoral convergence in OECD countries," Journal of Productivity Analysis, Springer, vol. 32(2), pages 63-79, October.
    4. Grodzicki, Maciej J. & Skrzypek, Jurand, 2020. "Cost-competitiveness and structural change in value chains – vertically-integrated analysis of the European automotive sector," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 276-287.
    5. François Gave, 1996. "Le modèle économique allemand est-il en crise ?," Post-Print hal-03579334, HAL.
    6. Yap, Josef T., 2006. "A Note on the Competitiveness Debate," Philippine Journal of Development PJD 2004 Vol. XXXI No. 1-, Philippine Institute for Development Studies.
    7. Athreye, Suma & Saeed, Abubakr & Saad Baloch, Muhammad, 2023. "The survival of outward investments from China and India: Is there a North-South divide?," Journal of Business Research, Elsevier, vol. 154(C).
    8. Harrigan, James, 1999. "Estimation of cross-country differences in industry production functions," Journal of International Economics, Elsevier, vol. 47(2), pages 267-293, April.
    9. Bellak, Christian & Leibrecht, Markus & Riedl, Aleksandra, 2008. "Labour costs and FDI flows into Central and Eastern European Countries: A survey of the literature and empirical evidence," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 17-37, March.
    10. Felipe, Jesus, 2009. "A Cautionary Note on the Interpretation of Unit Labor Costs as an Indicator of Competitiveness, with Reference to the Philippines," Philippine Journal of Development PJD 2007 Vol. XXXIV No. 2, Philippine Institute for Development Studies.
    11. L, lakshmanan & S, Chinngaihlian & Raj, Rajesh, 2007. "Competitiveness of India's Manufacturing Sector: An Assessment of Related Issues," MPRA Paper 9801, University Library of Munich, Germany, revised 16 Jan 2008.
    12. Nora Albu, 2018. "Lohnstückkosten des deutschen Verarbeitenden Gewerbes: inländische und globale Verflechtungen," IMK Studies 63-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    13. Edwards, Lawrence & Golub, Stephen S., 2004. "South Africa's International Cost Competitiveness and Exports in Manufacturing," World Development, Elsevier, vol. 32(8), pages 1323-1339, August.
    14. Pilat, Dirk, 1995. "Comparative productivity of Korean manufacturing, 1967-1987," Journal of Development Economics, Elsevier, vol. 46(1), pages 123-144, February.
    15. Bart van Ark & Dirk Pilat, 1993. "Productivity Levels in Germany, Japan, and the United States: DiJferences and Causes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2 Microec), pages 1-69.
    16. James Harrigan, 1997. "Cross-country comparisons of industry total factor productivity: theory and evidence," Research Paper 9734, Federal Reserve Bank of New York.
    17. Yap, Josef T., 2004. "A Note on the Competitiveness Debate," Discussion Papers DP 2004-39, Philippine Institute for Development Studies.

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