Labor Markets: Wages, the Employer’s Role, and Family Policy

Abstract

When I first moved to Switzerland I found prices to be extremely high. I moved with my salary based on my American research grant, and my first impression was that I would never be able to live. But my first impression was based on eating lunch out after my friend picked me up at the airport. After a few weeks of living a normal life, I learned that my salary was more than enough. In fact, many of the goods I purchase regularly such as food, clothing, and rent are not all that much more expensive than back home, around New York City. But my first impression was also somewhat true. Overall prices are high in Switzerland. Looking at the Swiss version of the standard European price index, all individually consumed goods and services (including government contributions) are 1.65 times the cost of goods and services in the rest of Europe; only Norway comes close at prices 1.62 times the European average. But there are differences across goods. Consumer goods are 1.3 times the EU price and electronics are only 1.1 times higher. But services are 1.8 times the average European price, education costs are 2.5 times higher, and the state sector costs 1.9 times more. The big difference is labor. When I want to consume something that is primarily labor—a visit to the dentist, a yoga class, a nice dinner out, or a haircut—then the prices suddenly skyrocket.