Comparing Real Wage Rates

Orley Ashenfelter

No 6500, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries – workers at McDonald’s restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000-2007, but with much less progress since the Great Recession.

Keywords: international comparisons; real wage rates; productivity (search for similar items in EconPapers)
JEL-codes: C81 C82 D24 J31 N30 O57 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2012-04
New Economics Papers: this item is included in nep-hme, nep-lab, nep-lma and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Published - published in: American Economic Review, 2012, 102 (2), 617 - 642

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Working Paper: Comparing Real Wage Rates (2012)
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