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The Labour Cost Index


This paper is a response to the requests of Canadian policy makers and researchers to develop a comprehensive index of total labour costs for the Canadian economy. This Labour Cost Index (LCI), which measures both wage and non-wage costs, would be free from the influence of employment shifts in industries and occupations.

This paper provides a review of the U.S. Employment Cost Index (ECI). The paper describes the LCI in general terms and compares this measure of labour cost with some other Canadian labour market indicators. The paper lists some of the uses and limitations of labour cost index based on the experiences of some other countries with such an index. The paper outlines the proposed plans and micro data model to be tested to develop a Canadian LCI. The major milestones and development issues are summarized in the paper.

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