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Employment Versus Wage Adjustment And The U.S. Dollar

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  • Jose Manuel Campa
  • Linda S. Goldberg

Abstract

Using two decades of annual data, we explore the links between real exchange rates and employment, wages, and overtime activity in U.S. manufacturing industries. Especially in industries with lower price-over-cost markups, exchange rates have statistically significant effects on industry wages, with the magnitude of these effects rising as industries increase their export orientation and declining as imported input use becomes more important. Exchange rate implications for jobs and hours worked are smaller and less precisely measured. We find a much higher response of overtime wages and overtime hours to transitory exchange rates movements. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 83 (2001)
Issue (Month): 3 (August)
Pages: 477-489

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Handle: RePEc:tpr:restat:v:83:y:2001:i:3:p:477-489

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  1. Clarida, R. & Gali, J., 1993. "Sources of Real Exchange Rate Fluctuations: How Important are Nominal Shocks?," Discussion Papers 1993_25, Columbia University, Department of Economics.
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  12. Huizinga, John, 1987. "An empirical investigation of the long-run behavior of real exchange rates," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 27(1), pages 149-214, January.
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  14. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, vol. 77(1), pages 93-106, March.
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