The Impact of Growth, Labour Cost and Working Time on Employment: Lessons from the French Experience

Abstract

To account for employment evolutions at the macro-economic level, we propose a modelling where employment is explained by added value, working time and real labour cost. Estimations using quarterly French macro-economic data are carried out in a multivariate framework for three sets of sectors. We get a relationship in which employment rises with growth and decreases when labour cost or working time rises in industrial sectors as well as in non-industrial ones. This model then permits to measure retrospectively the contributions of each of the variables to employment inflections since the mid-eighties.

Keywords: Per capita productivity, hourly productivity, labour demand, employment, working time, cointegration, VAR-ECM model

JEL Classification: E24, J22, J23