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IN SEARCH OF A STYLISED FACT: DO REAL WAGES EXHIBIT A CONSISTENT PATTERN OF CYCLICAL VARIABILITY?
Author(s) -
Brandolini Andrea
Publication year - 1995
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.1995.tb00112.x
Subject(s) - economics , imperfect competition , real wages , shock (circulatory) , imperfect , aggregate (composite) , wage , econometrics , simple (philosophy) , order (exchange) , panel data , competition (biology) , new keynesian economics , macroeconomics , keynesian economics , labour economics , neoclassical economics , monetary policy , medicine , linguistics , philosophy , materials science , epistemology , finance , composite material , ecology , biology
. The paper surveys the studies on the cyclical behaviour of real wages published from the twenties onwards. Both traditional simple neoclassical and keynesian models of the labour market suggest that real wages tend to move countercyclically. However, from a theoretical viewpoint, there are few reasons to expect this behaviour, once the simple model is extended to account for imperfect competition, uncertainty, lagged responses, or contracting between firms and workers. Empirical studies give different answers to the problem. The contributions reviewed in the paper are arranged roughly in chronological order: the interwar period, the postwar pre‐econometric studies, the econometric work using aggregate data, the evidence produced on the basis of longitudinal data, the analyses of the shock‐responsiveness of real wages, and, finally, the most recent papers attempting a reconciliation of the somewhat conflicting evidence derived from aggregate and panel data.