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The Neoclassical Determinants of Real Wage

Mehmet Ivrendi (), Bulent Guloglu () and Ibrahim Yetkiner ()
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Mehmet Ivrendi: Department of Economics, Pamukkale University

No 1304, Working Papers from Izmir University of Economics

Abstract: This paper presents empirical evidence that the neoclassical explanation of real wage has a high explanatory power at macro level. The factor endowments explanation of wage is surprisingly rare in the literature, at least at empirical level. In this paper, using panel data from 26 OECD countries, we show that technology and factor endowments (physical capital and labor stocks) have a significant explanatory power on the determination of real wage. Based on our results, we speculate that the supply-side rather than demand-side variables may be the major source of wage differences across countries.

Keywords: wage; factor endowment; inter-country wage differences; panel data (search for similar items in EconPapers)
JEL-codes: C23 E23 E24 J31 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2013-04
New Economics Papers: this item is included in nep-lma
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Citations: View citations in EconPapers (2)

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