Real Wages, Inflation and Labour Productivity in Australia

Saten Kumar, Don Webber and Geoff Perry

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents an analysis of real wages, inflation and labour productivity interrelationships using cointegration, Granger-causality and, most importantly, structural change tests. Applications of tests to Australian data over the 1965-2007 period corroborate the presence of a structural break in 1985 and show that a 1 percent increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0.5 and 0.8 percent. Comparable estimates for the effect of inflation on manufacturing sector productivity have limited statistical significance. Granger causality test results suggest that real wages and inflation both Granger-cause productivity in the long run.

Keywords: Labour productivity; Real wages; Inflation; Cointegration; Granger causality (search for similar items in EconPapers)
JEL-codes: C50 E23 (search for similar items in EconPapers)
Date: 2009-11-16
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19293

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