AN EMPIRICAL INVESTIGATION OF THE RELATIONS AMONG WAGE DIFFERENTIALS, PRODUCTIVITY GROWTH, AND TRADE |
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| Authors: | Koushik Ghosh Peter J Saunders Basudeb Biswas |
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| Institution: | Department of Economics, Central Washington University, 400 E. 8th Ave., Ellensburg, WA 98926-7486. E-mail;Department of Economics, Central Washington University, 400 E. 8th Ave., Ellensburg, WA 98926-7486. E-mail;Department of Economics, UMC 3530, Utah State University, Logan, UT 84322-3535. E-mail |
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| Abstract: | This article investigates the relations among productivity growth, wage differentials, and net exports in the United States. The time periods considered are the long run and the short run. Cointegration test results indicate that all the test variables are cointegrated. Therefore, productivity growth, wage differentials, and trade are all related in the long run. A short-run investigation of the relations among productivity growth, wage differentials, and trade is conducted within a vector error correction (VEC) estimation structure. The VEC tests indicate that, contrary to the prevailing view, productivity growth and trade have no impact on wage differentials in the short run. At the same time, it is apparent that wage differentials and trade have a positive and statistically significant impact on productivity growth in the United States in the short run. |
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