An empirical analysis of the unit labor cost-product price relation in the U.S. economy |
| |
Authors: | Harjit K Arora Paul R Blackley |
| |
Institution: | (1) Le Moyne College, USA |
| |
Abstract: | This article tests for cointegration between unit labor costs and the level of product prices in four sectors of the U.S.
economy: the aggregate business sector, the nonfinancial corporate sector, durable manufacturing, and nondurable manufacturing.
A finding of cointegration for most specifications supports the existence of long-run labor market equilibrium for producers
and suggests estimation of error-correction models to examine the dynamic relationships. In every sector except nondurable
manufacturing, error-correction model estimates indicate there is a mutual feedback relationship between unit labor costs
and prices. Controlling for deviations from full employment, oil price shocks, and the Nixon wage and price controls, the
results also provide evidence of significant nominal wage indexation in U.S. labor markets. Throughout the economy there appears
to exist both effective neoclassical wage and price adjustment mechanisms to maintain labor market equilibrium and short-run
rigidities which may contribute to deviations from full employment outcomes. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|