Stimulating Employment Growth with Higher Wages? A New Approach to Addressing an Old Controversy
24 Pages Posted: 20 Jul 2007
Abstract
We analyse the impact of wages on employment growth in West German local industries (1993-2002), addressing the tension between cost and potentially offsetting demand side effects. We construct a neutralised regional wage level that is detached from various productivity influences. A positive value implies 'overly high' labour costs, but also high local purchasing power. A subsequent employment growth regression yields significantly negative effects associated with this indicator. Cost push effects dominate, but our estimates suggest that demand side repercussions have a mitigating effect. There is considerable variation across industries, but in no case we find a positive employment reaction.
Suggested Citation: Suggested Citation
Here is the Coronavirus
related research on SSRN
Recommended Papers
Stimulating Employment Growth with Higher Wages? A New Approach to Addressing an Old Controversy
This is a Wiley-Blackwell Publishing paper. Wiley-Blackwell Publishing charges $42.00 .
File name: kykl.pdf
Size: 452K
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.
