Can Income Policies Reduce Real Wages? Micro-Evidence from the 1931 Australian Award Wage Cut

Andrew Seltzer ()

No 01/5, Royal Holloway, University of London: Discussion Papers in Economics from Department of Economics, Royal Holloway University of London

Abstract: Wages in Australia have long been set by government tribunals. Although the system may create microeconomic inefficiency, it also may facilitate incomes policies, such as the 10 percent wage cut in 1931. This paper uses records from early to mid-career employees of the Union Bank of Australia to examine the effectiveness of the award wage cut. It is shown that bank responded to the cut in the minimum wage scale by increasing the frequency of payments over the minimum rates, and that between 1924-34 tenure-adjusted real wages were essentially constant. Finally, it is hypothesized that the bank maintained a policy of real wage shielding as part of its internal labour market.

JEL-codes: E64 J38 N37 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2001-12, Revised 2001-12
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