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Comparing Real Wage Rates

Author

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  • Orley Ashenfelter

    (Princeton University)

Abstract

A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries workers at McDonald?s restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000-2007, but with much less progress since the Great Recession.

Suggested Citation

  • Orley Ashenfelter, 2012. "Comparing Real Wage Rates," Working Papers 1384, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:570
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Andrea ARIU & Vincent VANDENBERGHE, 2014. "Assessing the role of ageing, feminising and better-educated workforces on TFP growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2014017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Massimiliano Bratti & Simona Fiore & Mariapia Mendola, 2016. "Family Size, Sibling Rivalry and Migration: Evidence from Mexico," Development Working Papers 390, Centro Studi Luca d'Agliano, University of Milano, revised 21 Jun 2016.
    3. Clemens, Michael & Pritchett, Lant, 2016. "The New Case for Migration Restrictions: An Assessment," Working Paper Series rwp16-054, Harvard University, John F. Kennedy School of Government.
    4. Michael A. Clemens, 2013. "Why Do Programmers Earn More in Houston Than Hyderabad? Evidence from Randomized Processing of US Visas," American Economic Review, American Economic Association, vol. 103(3), pages 198-202, May.

    More about this item

    Keywords

    wage rate; nominal wage; workers; living standards;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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