A new unit labour cost changes decomposition Four pillars of cost competitiveness recovery
AbstractThis article presents a new decomposition of unit labour costs into compensation per worker and labour productivity, which, in turn, is decomposed into efficiency gains, technical progress and capital deepening. Data for Western European countries and the US show that the evolution of labour productivity components counteracts the deterioration in countries' cost competitiveness caused by increases in nominal wages. The policy implication is that efforts aimed at reducing nominal labour costs should be accompanied by policies fostering capital deepening. Further improvements in countries' cost competitiveness can be achieved by enhancing efficiency gains and technical progress, which has been mostly negative during the period under study.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 38670.
Date of creation: 30 Apr 2012
Date of revision:
unit labour cost; internal devaluation; labour productivity; technical change; capital deepening;
Other versions of this item:
- Charles-Henri Dimaria & Chiara Peronni, 2012. "A new unit labour cost changes decomposition Four pillars of cost competitiveness recovery," Working Papers halshs-00826324, HAL.
- C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ark, Bart van & Stuivenwold, Edwin & Ypma, Gerard, 2005. "Unit labour costs, productivity and international competitiveness," GGDC Research Memorandum 200580, Groningen Growth and Development Centre, University of Groningen.
- Carol Corrado & Charles Hulten & Daniel Sichel, 2009. "Intangible Capital And U.S. Economic Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 661-685, 09.
- Requillart, Vincent & Nauges, Celine & Simioni, Michel & Bontemps, Christophe, 2012.
"Food Safety Regulation and Firm Productivity: Evidence from the French Food Industry,"
124378, Italian Association of Agricultural and Applied Economics (AIEAA).
- Bontemps, Christophe & Nauges, Céline & Réquillart, Vincent & Simioni, Michel, 2012. "Food Safety Regulation and Firm Productivity:Evidence from the French Food Industry," TSE Working Papers 12-275, Toulouse School of Economics (TSE).
- Bontemps, Christophe & Nauges, Céline & Réquillart, Vincent & Simioni, Michel, 2012. "Food Safety Regulation and Firm Productivity:Evidence from the French Food Industry," IDEI Working Papers 696, Institut d'Économie Industrielle (IDEI), Toulouse.
- Lee, Chia-Yen & Johnson, Andrew L., 2012. "Two-dimensional efficiency decomposition to measure the demand effect in productivity analysis," European Journal of Operational Research, Elsevier, vol. 216(3), pages 584-593.
- Caballero, Ricardo J & Hammour, Mohamad L, 1994.
"The Cleansing Effect of Recessions,"
American Economic Review,
American Economic Association, vol. 84(5), pages 1350-68, December.
- Ricardo J. Caballero & Mohamad L. Hammour, 1991. "The Cleansing Effect of Recessions," NBER Working Papers 3922, National Bureau of Economic Research, Inc.
- Caballero, R.J. & Hammour, M.L., 1991. "The Cleansing Effect of Recessions," Discussion Papers 1991_59, Columbia University, Department of Economics.
- Olivier Blanchard, 2007. "Adjustment within the euro. The difficult case of Portugal," Portuguese Economic Journal, Springer, vol. 6(1), pages 1-21, April.
- Chad Syverson, 2010.
"What Determines Productivity?,"
NBER Working Papers
15712, National Bureau of Economic Research, Inc.
- Sena, Vania, 2006. "The determinants of firms' performance: Can finance constraints improve technical efficiency?," European Journal of Operational Research, Elsevier, vol. 172(1), pages 311-325, July.
- David Soskice & Torben Iversen, 2001. "Multiple Wage Bargaining Systems in the Single European Currency Area," Empirica, Springer, vol. 28(4), pages 435-456, December.
- Ricardo J. Caballero & Mohamad L. Hammour, 1994.
"On the Timing and Efficiency of Creative Destruction,"
NBER Working Papers
4768, National Bureau of Economic Research, Inc.
- Caballero, Ricardo J & Hammour, Mohamad L, 1996. "On the Timing and Efficiency of Creative Destruction," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 805-52, August.
- Katsimi, Margarita & Moutos, Thomas, 2010. "EMU and the Greek crisis: The political-economy perspective," European Journal of Political Economy, Elsevier, vol. 26(4), pages 568-576, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.