Do Excessive Wage Increases Raise Imports? Theory and Evidence
AbstractThis paper uses a model of trade in vertically differentiated products to examine the effects of "excessive wage" increases (i.e. above productivity) on the volume of commodity imports. The model predicts that for commodities, in which the country has comparative advantage in high quality varieties, an increase in "excessive wages" may result in a decrease in the volume of imports. The empirical validity of the model's predictions is demonstrated with the use of disaggregated Japanese import data for the period 1967-95. We also find that the aggregate volume of Japanese imports is not responsive to "excessive wage" changes.
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Bibliographic InfoPaper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2000_19.
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- Malley, Jim & Moutos, Thomas, 2006. "Do excessive wage increases raise imports?: Theory and evidence," Japan and the World Economy, Elsevier, vol. 18(2), pages 194-220, March.
- Jim Malley & Thomas Moutos, 2004. "Do excessive wage increases raise imports? Theory and evidence," Macroeconomics 0401003, EconWPA.
- Jim Malley & Thomas Moutos, 2001. "Do Excessive Wage Increases Raise Imports? Theory and Evidence," CESifo Working Paper Series 467, CESifo Group Munich.
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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