Unit labor cost and productivity recovery under non neutral technical change

Charles-Henri DiMaria and Chiara Peroni ()

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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.

Keywords: total factor productivity; efficiency; biased technical change; capital deepening; unit labor cost.; productivité totale des facteurs; efficacité; changement technologique; approfondissement du capital; coûts de main unitaire salarial (search for similar items in EconPapers)
Date: 2012-05-31
New Economics Papers: this item is included in nep-eff
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Working Paper: Unit labor cost and productivity recovery under non neutral technical change (2012)
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