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Wage-Profit Rate Schedules in Case of Saudi Arabia

Author

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  • Abdullah Algarini

    (College of Economics and Administrative Sciences, Al Imam Mohammad Ibn Saud Islamic University, Riyadh 7527, Saudi Arabia)

Abstract

This paper uses the real wage-profit rate schedule to examine the direction of technical change in Saudi economy during 1990-2016. We find that technical change is Hicks-neutral (i.e., increasing both labor and capital productivity) between 1990 and 2004; and Marx-biased (i.e., increasing labor productivity with declining capital productivity) over the period 2005-2014.The most noteworthy aspect of the Saudi economy pattern of technical change is that it has started to enter a phase of steady decrease in the profit rate and increase in the real wage, as seems to be the historical experience of many developed countries. The growth of real wage continues to grow by increasing 9.6%, 19.5%, and by 130%, while the profit rate grows by 11.8%, 5.7%, and -20.5% in the first three periods, respectively.

Suggested Citation

  • Abdullah Algarini, 2018. "Wage-Profit Rate Schedules in Case of Saudi Arabia," International Journal of Economics and Financial Issues, Econjournals, vol. 8(6), pages 84-89.
    • Handle: RePEc:eco:journ1:2018-06-12
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    References listed on IDEAS

    as
    1. Felipe, Jesus & Laviña, Editha & Fan, Emma Xiaoqin, 2008. "The Diverging Patterns of Profitability, Investment and Growth of China and India During 1980-2003," World Development, Elsevier, vol. 36(5), pages 741-774, May.
    2. Fabrizio Ferretti, 2008. "Patterns of technical change: a geometrical analysis using the wage-profit rate schedule," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(5), pages 565-583.
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    More about this item

    Keywords

    Productivity of labor and capital; Saudi Arabia; capital-labor ratio; wage-profit rate;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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