Money-Wage Rigidities and the Effects of Wage Controls

R. Lacroix and J. Robert

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: In the Debate Concerning Income Policies, the Relative Importance of Wage Rigidities Plays a Crucial Role. Implicitely Or Explicitely, Those Against Controls Emphasize the Cost of Their Implementation and Presuppose That There Will Be a Quick Reaction of Wages to Modifications in Labor Market Conditions and Expected Inflation. This Discussion Could Be Further Developed If Answers Were Given to the Following Questions: What Is the Importance of Wage Rigidities? to What Extent Could Income Policies Reduce These Rigidities? How Should Wage Controls Be Implemented to Achieve This Objective? in This Article, Firstly an Overview of How Money-Wage Rigidities Can Be Explained Is Presented. Secondly, a Wage Determination Model Consistent with the Existence of Money-Wage Rigidities Is Specified and Estimated Using Canadian Micro-Economic Data From the Manufacturing Industry. the Control Period and the Control-Off Periods Are Compared and the Extent to Which Money-Wage Rigidities Have Been Reduced During the Control Period Is Measured. Finally, the Concluding Section of This Article Examines What Can Be Learnt From the Canadian Experience.

Keywords: Wage Determination; Industry (search for similar items in EconPapers)
Pages: 30P. pages
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montde:8609

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