Till Labor Cost Do Us Part A Vecm Model of Unit Labor Cost Convergence in the Euro Area
AbstractA sustainable path of relative competitiveness among the EMU countries is a key factor for the survivorship of the currency union in the long run. We analyze unit labor costs in the European Union with VECM methodology to evaluate relative competitiveness of euro area countries, controlling for exchange rate on the adjustment dynamics, for the economy as a whole and for the manufacturing sector, considered as a proxy of the tradable sector. Results show a lack of convergence of member countries, which is more pronounced for the tradable sector. Persisting idiosyncratic dynamics may be driven by different bargaining policies and institutional structures of national labor markets, and by differential path of technological advance deterring convergence of long run productivity.
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Bibliographic InfoPaper provided by Doctoral School of Economics, Sapienza University of Rome in its series Working Papers with number 14.
Length: 36 pages
Date of creation: 2011
Date of revision: 2011
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Web page: http://phdschool-economics.dse.uniroma1.it/website/
More information through EDIRC
Unit labor costs; Exchange Rates; Convergence; Competitiveness; Manufacturing Sector;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-21 (All new papers)
- NEP-EEC-2011-07-21 (European Economics)
- NEP-EUR-2011-07-21 (Microeconomic European Issues)
- NEP-LAB-2011-07-21 (Labour Economics)
- NEP-MAC-2011-07-21 (Macroeconomics)
- NEP-OPM-2011-07-21 (Open Economy Macroeconomics)
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