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

Abstract. In order to account for the evolution of employment at the macro‐economic level, we have developed a model wherein 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 obtain a relationship in which employment rises when there is growth and falls when labour cost or working time rises, in both industrial and non‐industrial sectors. This model then allows retrospective measurement of the contributions of each of the variables with respect to employment inflections since the mid‐1980s.