Globalisation affects measures of wage competitiveness

Analysis – December 2019 – No. 27

Authors Pedersen, Erik Haller; Schmith, Adrian Michael Bay; Sørensen, Rasmus Rold
Subject Productivity and competitiveness; Economic activity and employment
Type Analysis
Year 2019
Published 17 December 2019
Danish firms increasingly have goods processed abroad and sell them directly from abroad. This allows for a higher degree of specialisation, as well as capacity expansion. However, when firms outsource production, Danish value added is to some extent decoupled from use of Danish labour. This is a challenge when measuring wage competitiveness, so in this analysis adjustment is made for Danish firms' activities abroad. That provides a more accurate impression of the competitiveness of physical production in Denmark.