Unit labor costs and competitiveness - a micro econometric analysis for East Germany

The paper stresses the value of unit labour costs as an indicator of competitiveness. It is assumed that there are different advantages by using microeconomic data which additionally allow the use of panelregressive methods. The findings for East German enterprises in the manufacturing industry (1998 to 2000) are that unit labour cost are useful for explaining the profit rate. This indicates that East German firms are facing in-price competition which depends clearly of labour costs. But unit labour costs do not explain the success on supraregional markets which are marked by non-in-price competition.

15. October 2003

Authors Harald Lehmann

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