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Real Wages, Inflation and Labour Productivity in Australia

  • Kumar, Saten
  • Webber, Don J.
  • Perry, Geoff

This paper presents an analysis of real wages, inflation and labour productivity interrelationships using cointegration, Granger-causality and, most importantly, structural change tests. Applications of tests to Australian data over the 1965-2007 period corroborate the presence of a structural break in 1985 and show that a 1 percent increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0.5 and 0.8 percent. Comparable estimates for the effect of inflation on manufacturing sector productivity have limited statistical significance. Granger causality test results suggest that real wages and inflation both Granger-cause productivity in the long run.

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File URL: http://mpra.ub.uni-muenchen.de/19293/1/MPRA_paper_19293.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19293.

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Date of creation: 16 Nov 2009
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Handle: RePEc:pra:mprapa:19293
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