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Republic of Estonia: Selected Issues
Author:
International Monetary Fund. European Dept.
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2017: Issue 010
Language:
English
Publication Date:
13 Jan 2017
DOI:
https://doi.org/10.5089/9781475565911.002
ISBN:
9781475565911
ISSN:
1934-7685
Pages:
41
Keywords:
ISCR; CR; firm; IMF staff calculation; labor; ULC growth; via-a-vis firm; statistics Estonia; firm age; labor productivity; competitiveness assessment; pro-productivity policy; Productivity; Total factor productivity; Employment; Labor productivity; Wages; Global; Western Europe; Europe
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This Selected Issues paper examines the impact of fast unit labor cost (ULC) growth in Estonia. ULCs in Estonia have now reached a level at which further unmitigated wage growth risks material damage to competitiveness and income convergence prospects with western Europe. This highlights the importance of making Estonia’s pro-productivity policies a success, but in the nearer term the onus is on mitigating excessive wage growth because in this area, Estonia, together with the other Baltics, distinguishes itself from the rest of central and eastern Europe. Tax policy can provide short-term relief.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund