European Parliament Library

Real Unit Labor Costs Differentials in EMU+L4700 :, How Big, How Benign and How Reversible?, Igor Lebrun, Esther Perez Ruiz

Real unit labor costs (RULC) growth differentials between euro area members have persisted since EMU began and even widened out in the run-up to the crisis. This paper focuses on the causes underlying such dispersion. According to our empirical findings, persistent RULC growth differentials can be attributed to divergent evolutions in capital-output ratios, nominal effective exchange rates and country-specific institutional features, coupled with an increased sensitivity of RULC to fundamentals following the shift in the monetary regime. Because these RULC growth discrepancies in EMU partly result from heterogeneous structural characteristics, policy action seeking more homogenous regulation across the euro area can make a significant contribution to reduce them
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Real Unit Labor Costs: The Facts; Figure 1. Euro Area: Intra-Area GDP Deflator, Nominal and Real Unit Labor Costs; Figure 2. Relative Intra-area Real Unit Labor Costs; III. The Model; A. Basic Equations; B. Model Predictions; Figure 3. Real Unit Labor Costs and the Capital-Output Ratio; IV. Estimating The Model; A. Data and Empirical Strategy; Figure 4. Evolution of relative RULC and Capital-Output Ratios; B. Results; Table 1. Panel RULC Regression; V. Conclusions And Policy Implications; Appendix 1. Model Predictions
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (46 p.)
Specific Material Designation
Form Of Item

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