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An Econometric Analysis of the Impact of Real Wages on Economic Growth in OECD Countries using the ARDL-PMG Model (2002-2022)

Author

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  • Kettaf Hamza

    (Department of Economics, Unviersity Center of Abdelhafid Bousouf-Mila, Algeria)

Abstract

Subject and purpose of work This study aimed to analyze the impact of real wages, human capital, and public expenditure as a percentage of Gross Domestic Product (GDP) on economic growth in six Organization for Economic Co-operation and Development (OECD) countries over the period (2002-2022). Materials and methods The Panel ARDL model using PMG estimation was employed to test short- and long-term relationships among the variables. Results It was found that real wages have a negative and significant impact on long-term economic growth, while human capital has a positive and significant impact. Public expenditure as a percentage of GDP showed a negative but insignificant impact in the long term. Conclusions The studies’ results show that real wages have a prominent role in determining the economic growth rate within the OECD countries. Moreover, the research reveals that the governmental expenditure is a very important factor in stimulating the economic growth.

Suggested Citation

  • Kettaf Hamza, 2025. "An Econometric Analysis of the Impact of Real Wages on Economic Growth in OECD Countries using the ARDL-PMG Model (2002-2022)," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 18(2), pages 177-189.
    • Handle: RePEc:vrs:ecoreg:v:18:y:2025:i:2:p:177-189:n:1005
    DOI: 10.2478/ers-2025-0015
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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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