Real wages, inflation and labour productivity in Australia

Kumar, Saten; Webber, Don J.; Perry, Geoff

Abstract

This article presents an analysis of real wages, inflation and labour productivity interrelationships using cointegration, Granger causality and, most importantly, structural change tests. Applications of tests to Australian data over the 1965 to 2007 period corroborate the presence of a structural break in 1985 and show that a 1% increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0.5% and 0.8%. Comparable estimates for the effect of inflation on manufacturing sector productivity have limited statistical significance. Granger causality test results suggest that real wages and inflation both Granger cause productivity in the long run. © 2012 Taylor & Francis.

Citation

Kumar, S., Webber, D. J., & Perry, G. (2012). Real wages, inflation and labour productivity in Australia. Applied Economics, 44(23), 2945-2954. https://doi.org/10.1080/00036846.2011.568405

• Journal Article Type: Article
• Publication Date: Aug 1, 2012
• Journal: Applied Economics
• Print ISSN: 0003-6846
• Electronic ISSN: 1466-4283
• Publisher: Taylor & Francis (Routledge)
• Peer Reviewed: Peer Reviewed
• Volume: 44
• Issue: 23
• Pages: 2945-2954
• DOI: https://doi.org/10.1080/00036846.2011.568405
• Keywords: labour productivity, real wages, inflation, cointegration, Granger causality
• Public URL: https://uwe-repository.worktribe.com/output/954301
• Publisher URL: http://dx.doi.org/10.1080/00036846.2011.568405