A new unit labour cost changes decomposition Four pillars of cost competitiveness recovery

Charles-Henri DiMaria and Chiara Peronni ()
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Chiara Peronni: STATEC - Institut National de la Statistique et des Etudes Economiques - Institut de Luxembourg
Authors registered in the RePEc Author Service: Chiara Peroni ()

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Abstract: This article presents a new decomposition of unit labour costs into compensation per worker and labour productivity, which, in turn, is decomposed into e ffciency 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 e fforts 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.

Keywords: unit labour cost; internal devaluation; labour productivity; technical change; capital deepening.; Coûts salariaux unitaires; dévaluation interne; productivité du travail; progrès technique; l'affrofondissement en capital (search for similar items in EconPapers)
Date: 2012-05-14
New Economics Papers: this item is included in nep-eff
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Working Paper: A new unit labour cost changes decomposition Four pillars of cost competitiveness recovery (2012)
Working Paper: A new unit labour cost changes decomposition Four pillars of cost competitiveness recovery (2012)
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