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Comparing Real Wage Rates

  • Orley Ashenfelter

    (Princeton University)

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.

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File URL: http://arks.princeton.edu/ark:/88435/dsp01t435gd01h
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Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 1384.

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Date of creation: Mar 2012
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Handle: RePEc:pri:indrel:570
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  1. Robert Allen & Robert C. Allen, 2007. "Wages, Prices, and Living Standards in China, Japan, and Europe, 1738-1925," Economics Series Working Papers 316, University of Oxford, Department of Economics.
  2. Allen, Robert C. & Bassino, Jean-Pascal & Ma, Debin & Moll-Murata, Christine & Zanden, Jan Luiten van, 2009. "Wages, prices, and living standards in China, 1738-1925: in comparison with Europe, Japan, and India," CEI Working Paper Series 2009-03, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  3. repec:pri:rpdevs:presidential%20address%2017january%202010%20all is not listed on IDEAS
  4. Robert Allen & Robert C. Allen, 2007. "How Prosperous were the Romans? Evidence from Diocletian`s Price Edict (301 AD)," Economics Series Working Papers 363, University of Oxford, Department of Economics.
  5. Hendricks, Lutz A., 2002. "How Important is Human Capital for Development? Evidence from Immigrant Earnings," Staff General Research Papers 11409, Iowa State University, Department of Economics.
  6. Michael Abbott & Orley Ashenfelter, 1976. "Labour Supply, Commodity Demand and the Allocation of Time," Review of Economic Studies, Oxford University Press, vol. 43(3), pages 389-411.
  7. Allen, Robert C., 2011. "Global Economic History: A Very Short Introduction," OUP Catalogue, Oxford University Press, number 9780199596652.
  8. N. Lesca, 2011. "Introduction," Post-Print halshs-00640604, HAL.
  9. C. Dominguez-Pery, 2011. "Introduction," Post-Print halshs-00740570, HAL.
  10. Angus Deaton, 2010. "Price indexes, inequality, and the measurement of world poverty," Working Papers 1207, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  11. Dani Rodrik, 1999. "Democracies Pay Higher Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 707-738.
  12. Ariel Mendez & Robert Tchobanian & Antoine Vion, 2011. "Introduction," Post-Print halshs-00661019, HAL.
  13. repec:pri:rpdevs:presidential%20address%2017january%202010%20all.pdf is not listed on IDEAS
  14. Albert Rees & Donald P. Jacobs, 1961. "Real Wages in Manufacturing, 1890-1914," NBER Books, National Bureau of Economic Research, Inc, number rees61-1.
  15. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
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