Front Matter Page
REPUBLIC OF ESTONIA
SELECTED ISSUES
January 2017
This paper on Republic of Estonia was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on
December 21, 2016.
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© 2017 International Monetary Fund
Front Matter Page
REPUBLIC OF ESTONIA
SELECTED ISSUES
December 21, 2016
Approved By
European Department
Prepared by Pragyan Deb, Christoph Klingen, and Andreas Tudyka
Contents
HOW WORRIED SHOULD WE BE ABOUT FAST ULC GROWTH IN ESTONIA?
A. Potential Bias in ULC-based Competitiveness Assessments
B. Assessment Based on Real Unit Labor Costs
C. Supplementary Competitiveness Indicators
D. The Root Causes of Estonia’s Rapid Wage Growth
E. Conclusions and Policy Implications
TABLE
1. Real Wage Growth
References
ANNEX
I. Nominal vs. Real Exchange Rates
PRODUCTIVITY DEVELOPMENTS IN ESTONIA: EVIDENCE FROM FIRM LEVEL DATA
A. The Distribution of Productivity, Employment, and Value-added Trends Across the Main Segments of the Economy
B. Firm Characteristics and Productivity Growth
C. Firm Characteristics and Employment Growth
D. Conclusions
FIGURES
1. Trends by Economic Activity
2. Trends by Level of Technological Sophistication
3. Trends by Firm Size
4. Trends by Sectors’ Tradability
5. Trends by Export Orientation
6. Drivers of Productivity
7. Drivers of Productivity: Regression Analysis
8. Drivers of Employment
9. Characteristics of Employment Generators
10. Drivers of Employment: Regression Analysis
References
ANNEX
I. Data Sources and Regression Results