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Understanding Competitiveness

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  • Crespo, Aranzazu; Segura-Cayuela, Ruben

Abstract

Using firm level data, we analyse the factors that drive the evolution of the aggregate Unit Labor Costs – the main European competitiveness indicator – in France, Germany, Italy and Spain. The evolution of the aggregate Unit Labor Cost is not driven by the evolution of the firm level Unit Labor Costs, but rather by an important factor for the competitiveness of a country: the reallocation of resources among the firms of the economy. Using the methodology of Hsieh and Klenow (2009), we show the importance of an efficient allocation of resources for productivity gains.

Suggested Citation

  • Crespo, Aranzazu; Segura-Cayuela, Ruben, 2014. "Understanding Competitiveness," Economics Working Papers MWP2014/20, European University Institute.
    • Handle: RePEc:eui:euiwps:mwp2014/20
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    Cited by:

    1. Manuel García‐Santana & Enrique Moral‐Benito & Josep Pijoan‐Mas & Roberto Ramos, 2020. "Growing Like Spain: 1995–2007," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(1), pages 383-416, February.
    2. Sara Calligaris & Massimo Del Gatto & Fadi Hassan & Gianmarco I P Ottaviano & Fabiano Schivardi & Tommaso MonacelliManaging Editor, 2018. "The productivity puzzle and misallocation: an Italian perspective," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(96), pages 635-684.
    3. Maurice J.G. Bun & Jasper Winter, 2022. "Capital and labor misallocation in the Netherlands," Journal of Productivity Analysis, Springer, vol. 57(1), pages 93-113, February.
    4. Michele Battisti & Filippo Belloc & Massimo Del Gatto, 2020. "Labor Productivity and Firm-Level TFP with Technology-Specific Production Function," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 283-300, January.
    5. Florian Gerth, 2017. "Allocative efficiency of UK firms during the Great Recession," Studies in Economics 1714, School of Economics, University of Kent.
    6. Massimo Del Gatto & Fadi Hassan & Gianmarco I.P. Ottaviano & Fabiano Schivardi, 2019. "Company Profits in Italy," European Economy - Discussion Papers 093, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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    More about this item

    Keywords

    Unit labour costs; Competitiveness; Misallocation; European Union;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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