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Wage Rises and Income Distribution--A Note

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  • Reynolds, Peter J

Abstract

This paper examines the effect of money-wage increases on manual labor's share of value added for the U.K. manufacturing sector using a core-periphery model. An increase in the rate of money-wage increases, for example from 10 percent to 11 percent, constrains firms' mark-ups and thereby increases manual labor's share by an estimated 1 percent immediately and by a further 1 percent if the higher rate of wage increases is sustained. For an open economy, manual labor's share would be further increased, depending on the source of inputs and the extent to which material prices keep pace with wage costs. Copyright 1987 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Reynolds, Peter J, 1987. "Wage Rises and Income Distribution--A Note," The Manchester School of Economic & Social Studies, University of Manchester, vol. 55(1), pages 77-87, March.
    • Handle: RePEc:bla:manch2:v:55:y:1987:i:1:p:77-87
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