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 âexcessive wageâ 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 âexcessive wagesâ 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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Date of creation: 17 Jan 2004
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wages; imports; vertically differentiated products;
Other versions of this item:
- 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, . "Do Excessive Wage Increases Raise Imports? Theory and Evidence," Working Papers 2000_19, Business School - Economics, University of Glasgow.
- Jim Malley & Thomas Moutos, 2001. "Do Excessive Wage Increases Raise Imports? Theory and Evidence," CESifo Working Paper Series 467, CESifo Group Munich.
- E - Macroeconomics and Monetary Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-01-18 (All new papers)
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