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Using Micro Data to Test the Divergence between Prices and Labour Values

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  • Andrew Trigg
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    Abstract

    An extremely robust finding in Marxian empirical economics is the 'Shaikh result' that estimates of labour values are closely correlated with prices. This result is established using input-output data together with a standard procedure in which variations in money wages are assumed to reflect labour quality. Two problems with this standard procedure can be identified. First, there is no translation between money units of wages and labour value units of output produced by different types of heterogeneous labour. Second, the standard procedure assumes perfectly competitive labour markets. In this paper, a new micro procedure for estimating labour values is developed in which both of these problems are addressed. To translate between money wage rates and the labour value of outputs a practical starting point for empirical analysis is suggested using some of the readily available tools of neoclassical economics. The assumption of perfect competition is accordingly relaxed by estimating a microeconometric wage equation using data from the UK Family Expenditure Survey. Conjoining this micro data with input-output data, estimates of labour values are used to test the Shaikh result, which is found not to hold in this particular exercise; with labour values diverging substantially from money prices.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

    Volume (Year): 16 (2002)
    Issue (Month): 2 ()
    Pages: 169-186

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    Handle: RePEc:taf:irapec:v:16:y:2002:i:2:p:169-186

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    1. Becker, Gary S, 1985. "Human Capital, Effort, and the Sexual Division of Labor," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages S33-58, January.
    2. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    3. Steedman, Ian & Tomkins, Judith, 1998. "On Measuring the Deviation of Prices from Values," Cambridge Journal of Economics, Oxford University Press, vol. 22(3), pages 379-85, May.
    4. Green, Francis, 1988. "Neoclassical and Marxian Conceptions of Production," Cambridge Journal of Economics, Oxford University Press, vol. 12(3), pages 299-312, September.
    5. Roemer, John E, 1980. "A General Equilibrium Approach to Marxian Economics," Econometrica, Econometric Society, vol. 48(2), pages 505-30, March.
    6. Shaikh,Anwar M. & Tonak,E. Ahmet, 1997. "Measuring the Wealth of Nations," Cambridge Books, Cambridge University Press, number 9780521564793.
    7. Mason, Patrick L, 1999. "Male Interracial Wage Differentials: Competing Explanations," Cambridge Journal of Economics, Oxford University Press, vol. 23(3), pages 261-99, May.
    8. Shaikh, Anwar, 1980. "Marxian Competition versus Perfect Competition: Further Comments on the So-Called Choice of Technique," Cambridge Journal of Economics, Oxford University Press, vol. 4(1), pages 75-83, March.
    9. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
    10. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
    11. Ermisch, John F & Wright, Robert E, 1988. "Gender Discrimination in the British Labour Market: A Reassessment," CEPR Discussion Papers 278, C.E.P.R. Discussion Papers.
    12. Petrovic, Pavle, 1987. "The Deviation of Production Prices from Labour Values: Some Methodology and Empirical Evidence," Cambridge Journal of Economics, Oxford University Press, vol. 11(3), pages 197-210, September.
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