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The Impact of Incomes Policy on Aggregate Wage Determination in Australia

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  • PHILIP E.T. LEWIS
  • MICHAEL G. KIRBY

Abstract

A model of aggregate wage determination for Australia is developed and used to examine the effects of incomes policies on the level of real wages. A theoretical model of wage determination which includes several channels of incomes policy effects is specified and estimated using aggregate data. The results provide strong evidence to support the view that during periods of certain incomes policies there have been important changes in behaviour in the Australian labour market. In particular, during the period of the Prices and Incomes Accord it is estimated that equilibrium real wages were over 5 per cent below what would have been expected from previous experience.

Suggested Citation

  • Philip E.T. Lewis & Michael G. Kirby, 1987. "The Impact of Incomes Policy on Aggregate Wage Determination in Australia," The Economic Record, The Economic Society of Australia, vol. 63(2), pages 156-161, June.
    • Handle: RePEc:bla:ecorec:v:63:y:1987:i:2:p:156-161
    DOI: 10.1111/j.1475-4932.1987.tb00647.x
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    References listed on IDEAS

    as
    1. Michael G. Kirby, 1981. "An Investigation of the Specification and Stability of the Australian Aggregate Wage Equation," The Economic Record, The Economic Society of Australia, vol. 57(1), pages 35-46, March.
    2. Rosen, Harvey S & Quandt, Richard E, 1978. "Estimation of a Disequilibrium Aggregate Labor Market," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 371-379, August.
    3. Phipps, A J, 1981. "The Impact of Wage Indexation on Wage Inflation in Australia: 1975(2)-1980(2)," Australian Economic Papers, Wiley Blackwell, vol. 20(37), pages 333-350, December.
    4. S.G.B. Henry & P.A. Ormerod, 1978. "Incomes Policy and Wage Inflation: Empirical Evidence for the Uk 1961-1977," National Institute Economic Review, National Institute of Economic and Social Research, vol. 85(1), pages 31-39, August.
    5. Lewis, Philip E. T. & Makepeace, Gerald H., 1984. "The estimation of a disequilibrium real wage equation for Britain," Journal of Macroeconomics, Elsevier, vol. 6(4), pages 399-410.
    6. repec:bla:ecorec:v:57:y:1981:i:156:p:35-46 is not listed on IDEAS
    7. Sarantis, Nicholas C., 1981. "Employment, labor supply and real wages in market disequilibrium," Journal of Macroeconomics, Elsevier, vol. 3(3), pages 335-354.
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    Citations

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    Cited by:

    1. K.F. Wallis, 1992. "On Macroeconomic Policy and Macroeconomic Modeling," Economics Discussion / Working Papers 92-04, The University of Western Australia, Department of Economics.
    2. PHILIP E.T. LEWIS & GARRY A. MacDONALD, 1993. "Testing for Equilibrium in the Australian Wage Equation," The Economic Record, The Economic Society of Australia, vol. 69(3), pages 295-304, September.
    3. Akhand Akhtar Hossain, 2008. "Rural Labour Market Developments, Agricultural Productivity, and Real Wages in Bangladesh, 1950–2006," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(1), pages 89-114.
    4. Kenneth F. Wallis, 1993. "On Macroeconomic Policy and Macroeconometric Models," The Economic Record, The Economic Society of Australia, vol. 69(2), pages 113-130, June.
    5. Chapman BJ. & Gruen F., 1990. "Analysis of the Australian consensual incomes policy: the prices and incomes accord," ILO Working Papers 992754563402676, International Labour Organization.
    6. John Freebairn, 1995. "Reconsidering the Marginal Welfare Cost of Taxation," The Economic Record, The Economic Society of Australia, vol. 71(2), pages 121-131, June.
    7. repec:ilo:ilowps:275456 is not listed on IDEAS
    8. Bruce J. Chapman, 1988. "Some Observations on Wage-Setting Practices in The Australian Labour Market System," Australian Journal of Management, Australian School of Business, vol. 13(2), pages 161-175, December.
    9. Peter Cook, 1992. "The Labor Government's Industrial Relations Policy: Flexibility with Equity," The Economic and Labour Relations Review, , vol. 3(1), pages 112-125, June.

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