Does Wage Inflation Cause Price Inflation?
17 Pages Posted: 30 Oct 2007
Date Written: April 2000
Recent attention has turned from unemployment levels to wage growth as an indicator of imminent inflation. But is there any evidence to support the assumption that increased wages cause inflation? This study updates and expands earlier research into this question and finds little support for the view that higher wages cause higher prices. On the contrary, the authors find more evidence that higher prices lead to wage growth.
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