Real wages, inflation and productivity in Australia

Kumar, S., Webber, D. J. and Perry, G. (2012) Real wages, inflation and productivity in Australia. Applied Economics, 44 (23). pp. 2945-2954. ISSN 0003-6846 Available from:

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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.

Item Type:Article
Uncontrolled Keywords:labour productivity, real wages, inflation, cointegration, Granger causality
Faculty/Department:Faculty of Business and Law > Department of Accounting, Economics and Finance
ID Code:15819
Deposited By: Professor D. Webber
Deposited On:24 Oct 2011 15:28
Last Modified:24 Feb 2016 20:50

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