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

Chiara Peroni () and Charles-Henri DiMaria

MPRA Paper from University Library of Munich, Germany

Abstract: This article presents a new decomposition of unit labour costs into compensation per worker and labour productivity, which, in turn, is decomposed into efficiency 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 efforts 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 (search for similar items in EconPapers)
JEL-codes: C44 E60 J01 O40 (search for similar items in EconPapers)
Date: 2012-04-30
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/38670/1/MPRA_paper_38670.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/39882/2/MPRA_paper_39882.pdf revised version (application/pdf)

Related works:
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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:38670

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().