Note: The views expressed here are the authors' own and do not necessarily reflect the views of the Federal Reserve Board or other members of its staff. We have benefitted from conversations with Steven N. Braun and Arthur Neef, as well as from comments on an earlier draft by Erwin R. Dean, David H. Howard, Linda Kole, Jaime R. Marquez, Ralph Tryon, and two anonymous referees.
INTERNATIONAL COMPARISONS OF LABOR COSTS IN MANUFACTURING
Article first published online: 8 MAR 2005
Review of Income and Wealth
Volume 35, Issue 4, pages 335–355, December 1989
How to Cite
Hooper, P. and Larin, KathrynA. (1989), INTERNATIONAL COMPARISONS OF LABOR COSTS IN MANUFACTURING. Review of Income and Wealth, 35: 335–355. doi: 10.1111/j.1475-4991.1989.tb00597.x
- Issue published online: 8 MAR 2005
- Article first published online: 8 MAR 2005
This paper presents a comparative study of the levels of unit labor costs in the manufacturing sectors of several countries. We begin 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 relative unit labor costs, based on output levels that are translated at purchasing power parity exchange rates, are then presented and compared to earlier estimates. The results show that the relative levels of unit labor costs in the United States and abroad have fluctuated significantly in recent years, due largely to movements in nominal exchange rates. In 1988, unit labor costs in the United States were below the average level of other industrialized countries, but were significantly above the level in a representative newly industrialized country, Korea. Insofar as unit labor costs serve as an indicator of international competitiveness, these results imply that the competitiveness of the U.S. manufacturing sector had improved significantly since 1985, at least with respect to other major industrialized countries.