scholarly journals Real Wage Rate And Productivity Relationship In The Declining U.S. Steel Industry

2011 ◽  
Vol 5 (2) ◽  
Author(s):  
Amaechi Nkemakolem Nwaokoro
Keyword(s):  
Unemployment Rate ◽  
Real Wage ◽  
Steel Industry ◽  
Wage Rate ◽  
Nominal Wage ◽  
Data Set ◽  
The Real ◽  
Control Factors ◽  
Real Wage Rate ◽  
Steel Import

This study examines the relationship between the real wage rate and productivity in the U.S. steel industry in the critical period of 1963-1988. This period witnessed a declining steel output and employment, increasing productivity, and a slight increasing real wage rate. The severity of the decline was felt in the 1980s. The popular explanation focuses on the nominal wage rate relative to productivity (non-nominal value). The study is based on high-frequency monthly data set on output, employment, productivity, wage rate, factor prices, and national unemployment rate. Also control factors are constructed for the steel import protection and non-protection regimes. Some econometric modeling issues are addressed. Recognizing that productivity is stochastic and is potentially an endogenous variable, it is instrumented with a set of productivity-related variables including controls for various steel protection and non-protection regimes. Third, the wage in the industry is modeled as a function of exogenous productivity, price of steel products, national unemployment rate, and real interest rate. Serial correlation characterizes the data, and this is corrected with inter-temporal effect of the real wage rate, and with a differencing model. The main results of the study are threefold.First, OLS and Instrumental Variable (IV) estimates show that productivity is the key variable for explaining the real wage rate. Second, like in the literature, the study finds that heavy and autonomous capitalization has an impact on the rising productivity. Third, the study identifies an inter-temporal high real wage rate as the driving factor for explaining the short run real wage rate.These results are somewhat sensitive across specifications.

Real Wage Rate And Productivity Relationship In The Declining U.S. Steel Industry

2011 ◽  
Vol 4 (11) ◽  
Author(s):  
Amaechi Nkemakolem Nwaokoro
Keyword(s):  
Unemployment Rate ◽  
Real Wage ◽  
Steel Industry ◽  
Wage Rate ◽  
Nominal Wage ◽  
Data Set ◽  
The Real ◽  
Control Factors ◽  
Real Wage Rate ◽  
Steel Import

This study examines the relationship between the real wage rate and productivity in the U.S. steel industry in the critical period of 1963-1988. This period witnessed a declining steel output and employment, increasing productivity, and a slight increasing real wage rate. The severity of the decline was felt in the 1980s. The popular explanation focuses on the nominal wage rate relative to productivity (non-nominal value). The study is based on high-frequency monthly data set on output, employment, productivity, wage rate, factor prices, and national unemployment rate. Also control factors are constructed for the steel import protection and non-protection regimes. Some econometric modeling issues are addressed. Recognizing that productivity is stochastic and is potentially an endogenous variable, it is instrumented with a set of productivity-related variables including controls for various steel protection and non-protection regimes. Third, the wage in the industry is modeled as a function of exogenous productivity, price of steel products, national unemployment rate, and real interest rate. Serial correlation characterizes the data, and this is corrected with inter-temporal effect of the real wage rate, and with a differencing model. The main results of the study are threefold.First, OLS and Instrumental Variable (IV) estimates show that productivity is the key variable for explaining the real wage rate. Second, like in the literature, the study finds that heavy and autonomous capitalization has an impact on the rising productivity. Third, the study identifies an inter-temporal high real wage rate as the driving factor for explaining the short run real wage rate.These results are somewhat sensitive across specifications.

Effective Demand and Income Distribution in The General Theory

1994 ◽  
Author(s):  
C. Sardoni
Keyword(s):  
General Theory ◽  
Income Distribution ◽  
Real Wage ◽  
Wage Rate ◽  
Full Employment ◽  
New Approach ◽  
The Real ◽  
Short Period ◽  
Real Wage Rate ◽  
The One

The paper looks at income distribution in a short-period context which is similar to that of Keynes’s General Theory. The approach to distribution is different from the one Kaldor adopted in the 1950s: no assumption of full employment is made. The conclusions concerning income distribution which can be inferred from the General Theory depend on Keynes’s assumptions concerning the behavior of prices and the real wage rate with respect to changes in output. In the paper these assumptions are criticized and the implications in terms of distribution are examined. In 1938-1939, Keynes’s conjectures about the relation between output level and the real wage rate were criticized by Dunlop, Tarshis, and, by implication, Kalecki. In his rejoinder, Keynes accepted some of these criticisms and suggested a new approach to income distribution that differs from Kaldor’s and is close to the one adopted by Kalecki and developed by Joan Robinson.

scholarly journals Comparing Real Wage Rates

2012 ◽  
Vol 102 (2) ◽  
pp. 617-642 ◽  
Author(s):  
Orley Ashenfelter
Keyword(s):  
Great Recession ◽  
Real Wage ◽  
Wage Rate ◽  
Preliminary Analysis ◽  
Living Standards ◽  
Nominal Wage ◽  
Important Indicator ◽  
The Great Recession ◽  
Wage Rates ◽  
Real Wage Rate

A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries—workers at McDonald's restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000–2007, but with much less progress since the Great Recession. (JEL C81, C82, D24, J31, N30, O57)

scholarly journals The Relationship between Real Wages and Output: Evidence from Pakistan

2000 ◽  
Vol 39 (4II) ◽  
pp. 1111-1126 ◽  
Author(s):  
Afia Malik ◽  
Ather Maqsood Ahmed
Keyword(s):  
Business Cycles ◽  
Interest Rates ◽  
Real Wage ◽  
Phillips Curve ◽  
Labour Supply ◽  
Nominal Wage ◽  
Purchasing Power ◽  
Real Wages ◽  
The Real ◽  
The Relationship

Information on wage levels is essential in evaluating the living standards and conditions of work and life of the workers. Since nominal wage fails to explain the purchasing power of employees, real wage is considered as a major indicator of employees purchasing power and can be used as proxy for their level of income. Any fluctuations in the real wage rate have a significant impact on poverty and the distribution of income. When used in relation with other economic variables, for instance employment or output they are valuable indicators in the analysis of business cycles. There has been a long debate regarding the relationship between real wages and the employment (output). Despite the apparent simplicity, the relationship between real wages and output has remained deceptive both theoretically and empirically. Keynes (1936) viewed cyclical movements in employment along a stable labour demand schedule thus indicating counter cyclical real wages. His deduction is in line with sticky wages and sticky expectations, which augments models like Phillips curve. In these models real wages behaved as counter-cyclical as nominal wages are slow to adjust during recession (decrease in aggregate demand and associated slowdown in price growth). Stickiness of wages or expectations shifts the labour supply over the business cycles [Abraham and Haltiwanger (1995)]. Barro (1990) and Christiano and Eichenbaum (1992) have associated these labour supply shifts with intertemporal labour-leisure substitution. This in response to temporary changes in real interest rates (fiscal policy shocks) could yield counter-cyclical real wages. However, Long and Plosser (1983) and Kydland and Prescott (1982) while studying the real business cycle models highlight on the technology shocks which leads to pro-cyclical real wages.

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