Unit Labour Costs in the Success of German Exports (1999-2007)

Abstract

The German commercial success is often associated to the strategy of internal devaluation that entailed a moderate wage growth. However, the main argument in this paper is that necessarily has to be other important and different factors that explain the outstanding trade performance, especially the evolution of productivity derived from different exporting specializations between commercial partners. Therefore, the German export performance is studied related to the evolution of the unit labour costs focusing both unit wages and productivity dynamics by manufacturing branches and particularly against the four largest economies in the euro zone: Spain, Italy, France and the Netherlands.