Real wages,inflation and labour productivity in Australia |
| |
Authors: | Saten Kumar Geoff Perry |
| |
Affiliation: | Department of Economics , School of Business and Law, Auckland University of Technology , Private Bag 92006, Auckland 1142, New Zealand |
| |
Abstract: | This article 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 to 2007 period corroborate the presence of a structural break in 1985 and show that a 1% increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0.5% and 0.8%. 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. |
| |
Keywords: | labour productivity real wages inflation cointegration Granger causality |
|
|