TY  - JOUR
AU  - Lipsey,Robert E.
AU  - Swedenborg,Birgitta
TI  - Explaining Product Price Differences Across Countries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13239
PY  - 2007
Y2  - July 2007
UR  - http://www.nber.org/papers/w13239
L1  - http://www.nber.org/papers/w13239.pdf
N1  - Author contact info:
Robert E. Lipsey
NBER
365 Fifth Avenue, Suite 5318
New York, NY 10016-4309
Tel: 212/817-7961
Fax: 212/817-1597
E-Mail: N/A user is deceased

Birgitta Swedenborg
Center for Business and Policy Studies
Studieförbundet Näringsliv och Samhälle
Box 5629
S-114 86 Stockholm, Sweden
Tel:  46-8-50 70 25 68
E-Mail: birgitta.swedenborg@sns.se
AB  - A substantial part of international differences in prices of individual products, both goods and services, can be explained by differences in per capita income, wage compression, or low wage dispersion among low-wage workers, and short-term exchange rate fluctuations.  Higher per capita income is associated with higher prices and higher wage dispersion with lower prices.  The effects of higher income and wage dispersion are moderated for the more tradable products.  The effects of wage dispersion, on the other hand, are magnified for the more labor-intensive products, particularly low-skill services. The differences in prices across countries are reflected in differences in the composition of consumption.  Countries in which prices of labor-intensive services are very high, such as the Nordic countries, consume much less of them.  For some services, the shares of GDP consumed in high-price countries are less than 20 percent of the shares in low-price countries.  Since these are services of very low tradability, the low consumption levels of these services imply low employment in them.
ER  -