IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Comparing Real Wage Rates: Presidential Address

  • Orley Ashenfelter

A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries--workers at McDonald's restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000-2007, but with much less progress since the Great Recession. (JEL C81, C82, D24, J31, N30, O57)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 2 (April)
Pages: 617-42

in new window

Handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:617-42
Contact details of provider: Web page:

More information through EDIRC

Order Information: Web:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Ariel Mendez & Robert Tchobanian & Antoine Vion, 2011. "Introduction," Post-Print halshs-00661019, HAL.
  2. Robert Allen & Robert C. Allen, 2007. "How Prosperous were the Romans? Evidence from Diocletian`s Price Edict (301 AD)," Economics Series Working Papers 363, University of Oxford, Department of Economics.
  3. Angus Deaton, 2010. "Price indexes, inequality, and the measurement of world poverty," Working Papers 1207, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  4. Robert C. Allen & Jean‐Pascal Bassino & Debin Ma & Christine Moll‐Murata & Jan Luiten Van Zanden, 2011. "Wages, prices, and living standards in China, 1738–1925: in comparison with Europe, Japan, and India," Economic History Review, Economic History Society, vol. 64(s1), pages 8-38, February.
  5. repec:oup:restud:v:43:y:1976:i:3:p:389-411 is not listed on IDEAS
  6. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
  7. repec:oup:qjecon:v:114:y:1999:i:1:p:83-116 is not listed on IDEAS
  8. Albert Rees, 1961. "Real Wages in Manufacturing, 1890-1914," NBER Books, National Bureau of Economic Research, Inc, number rees61-1, December.
  9. N. Lesca, 2011. "Introduction," Post-Print halshs-00640604, HAL.
  10. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
  11. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-51, August.
  12. Mark R. Rosenzweig, 2010. "Global Wage Inequality and the International Flow of Migrants," Working Papers 983, Economic Growth Center, Yale University.
  13. Richard B. Freeman & Remco Oostendorp, 2000. "Wages Around the World: Pay Across Occupations and Countries," NBER Working Papers 8058, National Bureau of Economic Research, Inc.
  14. Rosenzweig, Mark R., 2010. "Global Wage Inequality and the International Flow of Migrants," Working Papers 77, Yale University, Department of Economics.
  15. Hendricks, Lutz A., 2002. "How Important is Human Capital for Development? Evidence from Immigrant Earnings," Staff General Research Papers 11409, Iowa State University, Department of Economics.
  16. repec:oup:restud:v:49:y:1982:i:3:p:335-54 is not listed on IDEAS
  17. C. Dominguez-Pery, 2011. "Introduction," Post-Print halshs-00740570, HAL.
  18. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-87, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:617-42. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)

or (Michael P. Albert)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.