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Economic Growth and the Dynamics of Wage Determination: A Micro Simulation Study of the Stability Consequences of Deficient Variation in Factor Prices and Micro Structures

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  • Eliasson, Gunnar

    (Research Institute of Industrial Economics (IFN))

  • Lindberg, Thomas

    (Research Institute of Industrial Economics (IFN))

Abstract

Swedish Manufacturing Industry is said to be technologically and commercially in good shape. While Swedish wage levels were higher than in all industrial countries in the mid-70s, wages - expressed in international currencies - have now dropped to a mid-position, and real rates of return are back to the average for the postwar period. Given what empirical research on Swedish labor market behavior tells us, the large devaluation in late 1982 should have been followed by strong wage drift. However, to understand recruitment and wage setting decisions, one really needs a model in which firm pricing, production and investment decisions are controlled by overriding profitability objectives and where the rate of interest plays a role. The Swedish micro-to-macro model is such a model.

Suggested Citation

  • Eliasson, Gunnar & Lindberg, Thomas, 1986. "Economic Growth and the Dynamics of Wage Determination: A Micro Simulation Study of the Stability Consequences of Deficient Variation in Factor Prices and Micro Structures," Working Paper Series 170, Research Institute of Industrial Economics, revised Aug 1988.
    • Handle: RePEc:hhs:iuiwop:0170
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    References listed on IDEAS

    as
    1. Eliasson, Gunnar, 1984. "Micro heterogeneity of firms and the stability of industrial growth," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 249-274.
    2. Eliasson, Gunnar, 1977. "Competition and Market Processes in a Simulation Model of the Swedish Economy," American Economic Review, American Economic Association, vol. 67(1), pages 277-281, February.
    3. Hashimoto, Masanori & Raisian, John, 1985. "Employment Tenure and Earnings Profiles in Japan and the United States," American Economic Review, American Economic Association, vol. 75(4), pages 721-735, September.
    4. Eliasson, Gunnar, 1984. "The Firm and Financial Markets in the Swedish Micro-to-Macro Model (MOSES): Theory, Model and Verification," Working Paper Series 122, Research Institute of Industrial Economics.
    5. Carlsson, Bo A W, 1983. "Industrial Subsidies in Sweden: Macro-Economic Effects and an International Comparison," Journal of Industrial Economics, Wiley Blackwell, vol. 32(1), pages 1-23, September.
    6. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, vol. 70(3), pages 355-371, June.
    7. Schager, Nils Henrik, 1985. "The Replacement of the UV-Curve with a New Measure of Hiring Efficiency," Working Paper Series 149, Research Institute of Industrial Economics.
    8. Colin Lawrence & Robert Z. Lawrence, 1985. "Manufacturing Wage Dispersion: An End Game Interpretation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(1), pages 47-116.
    9. James W. Albrecht & Bo Axell & Harald Lang, 1986. "General Equilibrium Wage and Price Distributions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 687-706.
    10. Albrecht, James W. & Lindberg, Tomas, 1982. "The Micro Initialization of MOSES," Working Paper Series 72, Research Institute of Industrial Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic growth; wage setting; micro-macro simulation model;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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