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Unit labour costs, productivity and international competitiveness


  • Ark, Bart van
  • Stuivenwold, Edwin
  • Ypma, Gerard

    (Groningen University)


This paper provides international comparisons of relative levels of unit labour costs (ULC) for several OECD countries relative to the United States. The estimates are based on the Total Economy Database and the 60-Industry Database of the Groningen Growth and Development Centre (GGDC), and are also included in the Key Indicators of the Labour Market of the International Labour Office (ILO). The paper discusses the concept of relative ULC measures in comparison to other measures of competitiveness. It presents the main results for manufacturing and total economy measures of ULC, and makes two digressions, firstly by also presenting results for some major manufacturing sectors for a few large European countries and the U.S. and, secondly, by showing some comparable results for developing countries. An important observation from this paper is that relative productivity levels tend to move more or less in tandem with relative labour cost levels so that unit labour cost levels are closer between countries than labour cost levels per se. However, unit labour cost levels are certainly not identical between countries, as there are important deviations due to short term movements in relative prices (related to fluctuation in the nominal exchange rate) and differences in industrial structure. Whereas some of the differences cancel out at the aggregate level, differences in industry and product composition are quite important at a more detailed level.

Suggested Citation

  • 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.
  • Handle: RePEc:gro:rugggd:200580

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    References listed on IDEAS

    1. Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 327-368.
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    Cited by:

    1. Carlos A. Ibarra, 2016. "Investment, asset market, and the relative unit labor cost in Mexico," Economic Change and Restructuring, Springer, vol. 49(4), pages 339-364, November.
    2. Charles-Henri DI MARIA & Chiara PERONI, 2012. "Unit labor cost and productivity recovery under non neutral technical change," LEO Working Papers / DR LEO 1734, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    3. Mitra, Devashish & Ranjan, Priya, 2008. "Temporary shocks and offshoring: The role of external economies and firm heterogeneity," Journal of Development Economics, Elsevier, vol. 87(1), pages 76-84, August.
    4. Charles-Henri DI MARIA & Chiara PERONI, 2012. "A new unit labour cost changes decomposition Four pillars of cost competitiveness recovery," LEO Working Papers / DR LEO 179, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    5. Ghizdeanu, Ion & Tudorescu, Veronica, 2007. "Unit Labor Cost In Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 4(1), pages 57-64, March.
    6. Sebastian Nielen & Alexander Schiersch, 2014. "Temporary Agency Work and Firm Competitiveness: Evidence from German Manufacturing Firms," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 365-393, July.
    7. Gabor Bekes & Balazs Murakozy & Zsuzsa Munkacsi & Gabor Oblath, 2013. "Unit Values, Unit Labor Costs and Trade Performance in Four Central European Countries," IEHAS Discussion Papers 1329, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    8. Bassim Shebeb & Nadhem Al-Saleh, 2010. "Economic Growth in Bahrain: The Contribution of Multifactor Productivity," Working Papers 558, Economic Research Forum, revised 10 Jan 2010.
    9. Charles-Henri Dimaria, 2012. "Cannon Was Right But Incomplete: Frankel Was A Neglected Early Contribution To Growth Theory," Working Papers halshs-00826519, HAL.
    10. Martina Novotná & Tomáš Volek, 2013. "The Development of Real Unit Labour Costs in the Context of Cyclical Fluctuations in the Economy," Acta Universitatis Bohemiae Meridionales, University of South Bohemia in Ceske Budejovice, vol. 16(1), pages 101-109.
    11. Lili Kang & Peng Fei, 2013. "Cost Competitiveness Comparisons and Convergence in China," National Institute Economic Review, National Institute of Economic and Social Research, vol. 223(1), pages 49-60, February.
    12. Hideyuki Mizobuchi, 2015. "Measuring the comprehensive wage effect of changes in unit labor cost," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-12, December.

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