IDEAS home Printed from
   My bibliography  Save this article

The long-run and dynamic behaviors of wages, productivity and employment in Malaysia


  • Selamah Abdullah Yusof


Purpose - This paper aims to examine the long-run and dynamic behaviors of real wage-employment-productivity relationship, using Malaysian manufacturing data, and to determine which related labor theories are supported. Design/methodology/approach - Time-series econometric techniques, which include stationarity and cointegration tests, vector error correction model, impulse response function and variance decomposition, are applied to analyze the relationships of real wages, employment and productivity. Findings - A long run relationship exists between real wages, employment and real productivity, with real wages being the main variable that adjusts to maintain cointegration. The theory that real wages inversely affect employment is not supported, while the performance-based pay scheme theory, and not the efficiency wage theory, is validated. Research limitations/implications - Although the data used to measure wages and employment account for most of the production in the various manufacturing sectors, they do not include all the manufacturing industries. The analysis is also limited in time span since data for earlier periods are not available. Practical implications - The findings can provide assistance to policy makers in their implementation and evaluation of labor policies. Originality/value - The real wage-employment-productivity relationship is examined in the framework of the Malaysian manufacturing sector, and the study includes both the long-term and short-run behaviors of the variables.

Suggested Citation

  • Selamah Abdullah Yusof, 2008. "The long-run and dynamic behaviors of wages, productivity and employment in Malaysia," Journal of Economic Studies, Emerald Group Publishing, vol. 35(3), pages 249-262, August.
  • Handle: RePEc:eme:jespps:v:35:y:2008:i:3:p:249-262

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jespps:v:35:y:2008:i:3:p:249-262. 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: (Virginia Chapman). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.