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Labor costs and competitiveness in Bulgaria and the other countries of Central and Eastern Europe (the effects of the global crisis 2007)

Author

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  • Hristo Mavrov

    (University of Economics - Varna)

Abstract

The report analyzes the dynamics of cost competitiveness in Bulgaria compared to the countries of Central and Eastern Europe. As a basic indicators nominal unit labor cost and real unit labor cost are used. It was found that the growth rates of both indicators in Bulgaria before the crisis exceed those of the other countries except Latvia, Estonia and Romania. This is one of the reasons that contributed to high inflation during 2006-2008 in Bulgaria and delayed the membership in the Euro zone. The study also raises the question whether the real unit labor cost is a good indicator of competitiveness since it reflects the functional distribution of income. This finding directs to the concepts of wage-led growth versus profit-led growth. It is concluded that the answer to this question is an empirical one and further studies are needed.

Suggested Citation

  • Hristo Mavrov, 2013. "Labor costs and competitiveness in Bulgaria and the other countries of Central and Eastern Europe (the effects of the global crisis 2007)," Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series, Union of Scientists - Varna, Economic Sciences Section, issue 1, pages 15-24, November.
    • Handle: RePEc:vra:journl:y:2013:i:1:p:15-24
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    File URL: http://www.su-varna.org/izdanij/Ikonomika-13/Pages%2015-24.pdf
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    More about this item

    Keywords

    nominal unit labor cost; real unit labor cost; wage-led growh; profit-led growth;
    All these keywords.

    JEL classification:

    • A00 - General Economics and Teaching - - General - - - General

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