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An Econometric Analysis Of Relationship Between Real Wages And Employment


  • Erkan Ozata
  • Ethem Esen

    () (Anadolu University
    Anadolu University)


The relationship between real wages and employment has long been the controversial issue in economic theory. In this respect this study investigates the existence and the direction of a long-run relationship between real wages and employment level. For this purpose, cointegration and causality tests are applied to quarterly data from 1988:1 to 2008:4 of Turkish private manufacturing industry. The results indicate the existence of a long-run relationship between real wages and employment level. When the direction of this relationship is analyzed, obtained results support the view of Neo-classical economists. According to this, a reduction in real wages will increase the employment level.

Suggested Citation

  • Erkan Ozata & Ethem Esen, 2010. "An Econometric Analysis Of Relationship Between Real Wages And Employment," Anadolu University Journal of Social Sciences, Anadolu University, vol. 10(2), pages 55-70, May.
  • Handle: RePEc:and:journl:v:10:y:2010:i:2:p:55-70

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    References listed on IDEAS

    1. Peree, Eric & Steinherr, Alfred, 1989. "Exchange rate uncertainty and foreign trade," European Economic Review, Elsevier, vol. 33(6), pages 1241-1264, July.
    2. Mckenzie, Michael D., 1998. "The impact of exchange rate volatility on Australian trade flows," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 8(1), pages 21-38, January.
    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. McKenzie, Michael D. & Brooks, Robert D., 1997. "The impact of exchange rate volatility on German-US trade flows," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 7(1), pages 73-87, April.
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    Cited by:

    1. Vasilescu, Denisa Maria & Aparaschivei, Larisa & Roman, Mihai Daniel, 2012. "Employment in Romania: evidence from a panel data analysis," MPRA Paper 38388, University Library of Munich, Germany.

    More about this item


    Employment; Real wages; Zivot Andrews Test; Cointegration; Causality.;

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics


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