A deterministic analysis of change in international unit labor costs: Import implications for US industry

United States industry faces an import threat in the domestic market because foreign exporters achieve lower growth in their unit labor dollar cost. A deterministic analysis of the sources of change over the decade 1974–84 shows that although most foreign trade partners experienced a higher rate of growth in hourly labor compensation than the United States, they discounted this cost disadvantage by achieving more than offsetting cost reductions from growth in labor productivity and in the foreign currency to US dollar exchange rate.