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Competitiveness and Employment in a Small Open Economy

Patrice Pieretti and Arnaud Bourgain

Journal of Economic Integration, 2003, vol. 18, 391-405


The model developed in this article leads to a reduced form that synthesizes the relevant determinants of job creation in a small open economy. Among these factors, we stress the role of competitiveness that is measured by an indicator taking into account the foreign price sensitiveness of domestic exporters. Our model shows that the stronger the price setting power of domestic firms, the greater the impact of competitiveness on employment is. The model is used to empirically estimate the determinants of job creation over the period 1970-1998, in Luxembourg, a small economy, where employment expanded dramatically during the last decades.

Keywords: Competitiveness; Employment; Labor demand; Small open economy (search for similar items in EconPapers)
JEL-codes: F41 J23 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (5)

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