Wage Dispersion and Country Price Levels
AbstractThe purpose of this paper was to investigate whether there is a relationship between the degree of wage dispersion in a country and its price level relative to other countries, compared in a common currency. It was found that once a country's real per capita income and deviations of its exchange rate from its trend value are allowed for, there is a pervasive relationship between wage dispersion and prices. Low wage dispersion, defined as a relatively small difference between the median wage and that of the lowest paid decile of workers, is associated with high price levels. The relationship applies more frequently to service prices than to goods prices, but where it does apply, the effects of wage dispersion are as large for goods as for services.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6039.
Date of creation: Mar 2000
Date of revision:
Publication status: published as Robert E. Lipsey, Birgitta Swedenborg. "Wage Dispersion and Country Price Levels," in Alan Heston and Robert E. Lipsey, editors, "International and Interarea Comparisons of Income, Output, and Prices" University of Chicago Press (1999)
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Other versions of this item:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- F3 - International Economics - - International Finance
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