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

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