Wages in the Business Cycle: An Empirical and Methodological Analysis (Bloomsbury Academic Collections: Economics)

Description

During prolonged economic recessions when the normal cyclical expansion of output fails to materialize, the topic of the ‘cyclical behaviour of wages' has emerged as an area of debate. In 1985, the British Treasury claimed that academic studies into the cyclical behaviour of wages demonstrated that a cut in wages would increase employment. Wages in the Business Cycle contests this argument by presenting the results of original, empirical work which illustrates the absence of any systematic empirical regularity to wage movements over the business cycle. Jonathan Michie argues that the re-emergence of this debate must be seen within the context of the theory of the ‘labour demand function', representing an attempt to challenge the Keynesian theoretical assumptions implicit in the bulk of applied macro economic work up to the late 1970s. Cover Contents 1. Introduction 1. The 'stylized fact' of cyclical wages 1.1. The belief in counter-cyclical real wages 2. Theory, facts and falsification 2.1. Falsification and the methodological responses 2.2. Falsification and the individual responses 3. Inference 4. Structure of the book 2. The Theoretical Background 1. Neoclassical assumptions 2. Alternative assumptions 2.1. Technology shocks 2.2. Quantity rationing 2.3. Kalecki 3. Generalized model 4. Pro-cyclical wage movements 4.1. Logical possibility 4.2. Causal mechanism 5. Conclusion 3. A Survey of the Literature 1. The Literature 2. From Keynes (1936) to Keynes (1939) 2.1. Accuracy and uniformity 2.2. Real and product wages 2.3. Marginal user cost 2.4. Shape of cost curves 2.5. Mark-up 3. Methods 3.1. Wage equations and labour demand schedules 3.2. The existence of cycles 3.3. Cyclical variable 3.4. Wage series and the role of materials 3.5. Lags 3.6. Detrending 3.7. Data coverage 4. Results 5. Conclusion 4. International Results 1. Product wages 2. Lags and leads 3. Materials costs 4. Wages and materials costs 5. Wages, materials costs and output 6. Total direct costs 7. Comparison with other studies 8. Parameter stability 9. Conclusion 5. Employment 1. Methods 1.1. The specification of the correlation to be tested 1.2. The estimation of the correlations 2. Results 2.1. Wages and employment 2.2. Materials costs and total direct costs 2.3. Employment conditional on output 2.4. Number employed 3. Discussion 4. Conclusion 6. Phases of the Cycle 1. Methods 1.1. Phase Average Trend 1.2. Dependent and independent variables 2. Results 2.1. Cycle phases 2.2. 1952 III to 1967 III 3. Conclusion 7. Individual Industries and the Aggregate Economy 1. Methods 2. Results 3. Aggregate output and industry wage 4. Wage-output correlation and the aggregate cycle 5. Conclusion 8. The History of the Cyclical Wage Debate 1. Historiography 1.1. Comparison with Dunlop and Keynes 1.2. Materials and total direct costs 2. 1920–1939 3. Conclusion 9. Conclusion 1. The cyclical wage debate 2. The three levels of the debate 2.1. The search for a stylized fact 2.2. Theory, facts and falsification 2.3. Inference 3. Government economic policy Appendix 1. Using Alternative Price Deflators Appendix 2. Construction of Total Direct Cost Index Appendix 3. Statistical Tests Appendix 4. Data Appendix 5. The Phase Average Trend Technique Appendix 6. Seasonal Adjustment Bibliography Author Index A B C D E F G H K L M N O P Q R S T W Z Subject Index A B C E F G H I J K L M N O P Q R S T U V W