Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/193627 
Year of Publication: 
2019
Series/Report no.: 
ICAE Working Paper Series No. 88
Publisher: 
Johannes Kepler University Linz, Institute for Comprehensive Analysis of the Economy (ICAE), Linz
Abstract: 
We reassess the contemporary relevance of the "Kaldor paradox" (1978), according to which changes in relative unit labor costs as well as relative export prices are positively correlated with advanced countries' export shares in world markets - although conventional trade theory predicts the opposite. Using a sample of 34 OECD countries over the period 1980-2015, we find clear evidence for the continued relevance of Kaldor's paradox. Our findings indicate that the paradox can neither be resolved by pointing to a lack of econometric sophistication in Kaldor's original work nor by exploiting additional data on other major determinants of export success (e.g. technology). A reverse-causality interpretation - according to which export success allows countries to increase relative unit labor costs without substantially reducing international competitiveness - seems most promising for rationalizing the paradox.
Subjects: 
Trade
export success
competitiveness
technology
Kaldor effect
Document Type: 
Working Paper

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