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Unit labor cost and productivity recovery under non neutral technical change

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  • Charles-Henri Dimaria

    (LEO - Laboratoire d'Économie d'Orleans [UMR7322] - UO - Université d'Orléans - UT - Université de Tours - CNRS - Centre National de la Recherche Scientifique, STATEC - Institut National de la Statistique et des Etudes Economiques - LUXEMBOURG)

  • Chiara Peroni

    (STATEC - Institut National de la Statistique et des Etudes Economiques - LUXEMBOURG)

Abstract

This document proposes a new decomposition of unit labor cost changes (ULC) in terms of efficiency, technical progress and capital deepening. This decomposition is applied to data for western European countries and the US. Results show that sustained growth rates of labor compensation and poor labor productivity gains lead to large losses in cost competitiveness. The poor productivity performance is explained by low technical progress and even technical regress. In addition, it is shown that labor intensive technical change results in positive efficiency changes while capital intensive technical changes improves overall technical change. Last, when technical change is capital intensive cost competitiveness losses are lower.

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  • Charles-Henri Dimaria & Chiara Peroni, 2012. "Unit labor cost and productivity recovery under non neutral technical change," Working Papers halshs-00826351, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00826351
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00826351v1
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