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International comparisons of labor costs in manufacturing

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  • Peter Hooper
  • Kathryn A. Larin

Abstract

This paper presents a comparative study of the level of unit labor costs in the manufacturing sectors of several countries. The paper begins by surveying earlier estimates of relative productivity and unit labor cost levels and evaluating the various methodologies that have been used in previous studies. Empirical estimates of the levels of foreign unit labor costs in dollars are derived based on labor compensation translated into dollars at nominal exchange rates and labor productivity translated into dollars at purchasing power parity exchange rates. These estimates are compared with results obtained in earlier studies. The results show that the level of unit labor costs in the United States has fluctuated significantly in recent years, predominantly with fluctuations in the nominal exchange rate. As of early 1988, unit labor costs in the United States had dropped well below the average level of other industrialized countries but were significantly above the level in a representative newly industrialized country, Korea.

Suggested Citation

  • Peter Hooper & Kathryn A. Larin, 1988. "International comparisons of labor costs in manufacturing," International Finance Discussion Papers 330, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:330
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    References listed on IDEAS

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    1. A.D. Roy, 1982. "Labour Productivity in 1980: an International Comparison," National Institute Economic Review, National Institute of Economic and Social Research, vol. 101(1), pages 26-37, August.
    2. Linda A. Bell & Janet Ceglowski & Susan Hickok, 1988. "The competitiveness of U.S. manufactured goods: recent changes and prospects," Quarterly Review, Federal Reserve Bank of New York, vol. 13(Spr), pages 7-22.
    3. Isard, Peter, 1977. "How Far Can We Push the "Law of One Price"?," American Economic Review, American Economic Association, vol. 67(5), pages 942-948, December.
    4. Peter Hill, 1984. "Real Gross Product in OECD Countries and Associated Purchasing Power Parities," OECD Economics Department Working Papers 17, OECD Publishing.
    5. Kravis, Irving B, 1976. "A Survey of International Comparisons of Productivity," Economic Journal, Royal Economic Society, vol. 86(341), pages 1-44, March.
    6. Christensen, L. R. & Cummings, D. & Jorgenson, D. W., 1981. "Relative productivity levels, 1947-1973 : An international comparison," European Economic Review, Elsevier, vol. 16(1), pages 61-94.
    7. Bergson, Abram, 1987. "Comparative Productivity: The USSR, Eastern Europe, and the West," American Economic Review, American Economic Association, vol. 77(3), pages 342-357, June.
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    Cited by:

    1. Jean Le Dem & Frédéric Lerais, 1990. "Où va la productivité du travail ?," Économie et Statistique, Programme National Persée, vol. 237(1), pages 49-67.

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