Real and Money Wage Rates

John T. Dunlop

Journal of Economic Perspectives, 1998, vol. 12, issue 2, 223-234

Abstract: In the General Theory, John Maynard Keynes held money and real wage rates move in opposite directions. In expansion, prices increase faster because of increasing costs and a rise in the proportion of product going to profits. Neoclassical economists held similarly. Money illusion of workers supported their common view. The author's 1938 article rather showed a procyclical pattern, significant to macroeconomic models of the economy. Contemporary literature with new elements of compensation and new measures of wages supports a slightly procyclical relationship. Increased output and employment in expansion do not require lower real wages.

JEL-codes: E24 (search for similar items in EconPapers)
Date: 1998
Note: DOI: 10.1257/jep.12.2.223
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Citations: View citations in EconPapers (3)

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