Global and European Labor Costs

Multinational companies and national governments pay considerable attention to labor cost and labor productivity differentials across countries. This paper analyzes total and unit labor differentials for a group of European and non-European countries in the 1960-1998 period. It deals with (i) the magnitude of total labor cost differences (ii) the developments in unit labor cost and labor productivity (iii) the convergence process between countries with higher and lower labor costs. *The author is professor in European Integration and International Business at the Faculty of Economics and Applied Economics, KU Leuven, at the Vlerick Leuven Gent Business school and the University of Rochester Executive MBA programs in Europe. Ellen Brock provided excellent computational assistance. Suggestions by Patrick Vanhoudt are gratefully acknowledged. Address correspondence to Filip Abraham, Naamsestraat 69, 3000 Leuven, Belgium;phone (32) (0)1632 68 33;fax : (32) (0)1632 67 96; e-mail: [email protected];