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Wages in a factor proportions model with energy input

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  • Kim, Hyeongwoo
  • Thompson, Henry

Abstract

This paper examines US wage adjustment in a structural vector autoregression of the factor proportions model with capital, labor, and energy inputs. Data cover the years 1949 to 2006. The wage adjusts to changes in input levels and output prices over six to eight years. Energy has a more robust wage impact than capital. The wage reacts weakly if at all to the falling price of manufactures and rising price of services during the sample period. Estimates relate directly to factor proportions theory suggesting robust substitution with labor in the middle of the factor intensity ranking.

Suggested Citation

  • Kim, Hyeongwoo & Thompson, Henry, 2014. "Wages in a factor proportions model with energy input," Economic Modelling, Elsevier, vol. 36(C), pages 495-501.
  • Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:495-501 DOI: 10.1016/j.econmod.2013.10.021
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    Keywords

    Wages; Energy; Factor proportions model; Vector autoregression;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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