ABSTRACT
Neoclassical macroeconomists model production as a single good which, with some twists like branding, can be used for exports, consumption, investments or even saving. Nominal Unit Labor Costs (NULC) are a staple of applied macroeconomic statistics and are defined as nominal labor costs per unit of real gross domestic product. Specifically, NULC should not increase too much. After the introduction of the European Union, NULC, originally developed to gauge the influence of wage increases on the rate of inflation, gained prominence as an aggregate indicator of competitivity. A relative decline of periphery NULC compared with other eurozone countries was understood to be the policy of choice to increase international competitivity, to increase exports to compensate for the sudden stop of inflowing capital and to lower unemployment. Relatively high NULC were understood to be a sign of low competitiveness.
