Wage Gaps, Factor Shares and Real Wages

John McCallum
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John McCallum: University of Quebec

A chapter in Trade Unions, Wage Formation and Macroeconomic Stability, 1986, pp 294-317 from Palgrave Macmillan

Abstract: Abstract The relationships which link real wages, capital intensity and factor shares are tested as a prelude to tests of the relationship between wage rigidities and labour market institutions. Evidence from seven countries indicates that the evolution of factor shares is well explained by changes in capital intensity, which is itself well explained by product wages and technical progress. A key implication is that changes in full employment capital-labour ratios have been the dominant reason for the longer-run decline of profit shares in Europe and Japan relative to the United States. It follows that changes in cyclically adjusted factor shares provide little or no information regarding the gap between the actual real wage and its full employment value.

Keywords: Real Wage; Technical Progress; Full Employment; Labour Market Institution; Wage Rigidity (search for similar items in EconPapers)
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-08596-5_20

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DOI: 10.1007/978-1-349-08596-5_20

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