scholarly journals Measuring the comprehensive wage effect of changes in unit labor cost

2015 ◽  
Vol 4 (1) ◽  
Author(s):  
Hideyuki Mizobuchi
Keyword(s):  
Labor Cost ◽  
Unit Labor Cost ◽  
Wage Effect

scholarly journals How Do Firms Respond to Reduced Labor Costs? Evidence from the 2007 Swedish Payroll Tax Reform

2021 ◽  
Author(s):  
Sven-Olov Daunfeldt ◽  
Anton Gidehag ◽  
Niklas Rudholm
Keyword(s):  
Tax Reform ◽  
Cost Savings ◽  
Labor Cost ◽  
Policy Instrument ◽  
Extensive Margin ◽  
Labor Costs ◽  
Payroll Tax ◽  
Payroll Taxes ◽  
Wage Effect ◽  
Marginalized Groups

AbstractOne way for policymakers to reduce labor costs and stimulate the recruitment of marginalized groups of labor in a highly unionized economy is to lower payroll taxes. However, the efficiency of this policy instrument has been questioned, and previous evaluations have mostly found small employment effects for such reforms. We investigate the effects of a payroll tax cut in Sweden that decreased firms’ labor costs in relation to the number of young employees that they had employed when the reform was implemented in 2007. We find that most firms received small labor cost savings as a result of the reform, but those that received larger cost savings increased their number of employees significantly more than firms that received no, or minor, labor cost savings. Our findings also suggest that the payroll tax cut increased the total wages paid to incumbent workers, but the wage effect was too small to offset the positive extensive-margin employment effect of the reform. In total, we find that the Swedish payroll tax reform created 18,100 jobs over the period 2006–2008; most of these jobs were within the targeted group of young employees.

scholarly journals Inflation and Unit Labor Cost

2012 ◽  
Vol 44 ◽  
pp. 111-149 ◽  
Author(s):  
ROBERT G. KING ◽  
MARK W. WATSON
Keyword(s):  
Labor Cost ◽  
Unit Labor Cost

Testing for stationarity in large panels with cross-dependence, and US evidence on unit labor cost

2010 ◽  
Vol 37 (8) ◽  
pp. 1381-1397 ◽  
Author(s):  
Matei Demetrescu ◽  
Uwe Hassler ◽  
Adina I. Tarcolea
Keyword(s):  
Labor Cost ◽  
Unit Labor Cost ◽  
Large Panels

scholarly journals Versailles Redux? Eurozone Competitiveness in a Dynamic Balassa-Samuelson-Penn Framework

2014 ◽  
Vol 5 (2) ◽  
Author(s):  
Kevin Stahler ◽  
Arvind Subramanian
Keyword(s):  
Exchange Rate ◽  
International Comparison ◽  
Labor Cost ◽  
Prima Facie ◽  
Nominal Exchange Rate ◽  
Strongly Correlated ◽  
Unit Labor Cost ◽  
Advanced Economies ◽  
Exchange Rate Changes ◽  
Special Circumstances

AbstractPrima facie, competitiveness adjustments in the eurozone, based on unit labor cost developments, appear sensible and in line with what the economic analyst might have predicted and the economic doctor might have ordered. But a broader and arguably better – Balassa-Samuelson-Penn (BSP) – framework for analyzing these adjustments paints a very different picture. Taking advantage of the newly released PPP-based estimates of the International Comparison Program (2011), we identify a causal BSP relationship. We apply this framework to computing more appropriate measures of real competitiveness changes in Europe and other advanced economies in the aftermath of the recent global crises. There has been a deterioration, not improvement, in competitiveness in the periphery countries between 2007 and 2013. Second, the pattern of adjustment within the eurozone has been dramatically perverse, with Germany having improved competitiveness by 9% and with Greece’s having deteriorated by 9%. Third, real competitiveness changes are strongly correlated with nominal exchange rate changes, which suggests the importance of having a flexible (and preferably independent) currency for effecting external adjustments. Fourth, internal devaluation – defined as real competitiveness improvements in excess of nominal exchange rate changes – is possible but seems limited in scope and magnitude. Our results are robust to adjusting the BSP framework to take account of the special circumstances of countries experiencing unemployment. Even if we ignore the BSP effect, the broad pattern of limited and lopsided adjustment in the eurozone remains.

To converge or not converge: unit labor cost inflation in the Euro area

2011 ◽  
Vol 44 (2) ◽  
pp. 455-467 ◽  
Author(s):  
Helmut Herwartz ◽  
Florian Siedenburg
Keyword(s):  
Euro Area ◽  
Labor Cost ◽  
Unit Labor Cost
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