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Real wages, inflation and labour productivity in Australia

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  • Saten Kumar
  • Don J. Webber
  • Geoff Perry

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.

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File URL: http://hdl.handle.net/10.1080/00036846.2011.568405
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Bibliographic Info

Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 44 (2012)
Issue (Month): 23 (August)
Pages: 2945-2954

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Handle: RePEc:taf:applec:44:y:2012:i:23:p:2945-2954

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Cited by:
  1. Nir Klein, 2012. "Real Wage, Labor Productivity, and Employment Trends in South Africa: A Closer Look," IMF Working Papers 12/92, International Monetary Fund.
  2. Josheski, Dushko & Lazarov, Darko & Fotov, Risto & Koteski, Cane, 2011. "Causal relationship between wages and prices in UK: VECM analysis and Granger causality testing," MPRA Paper 34095, University Library of Munich, Germany.

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