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Discussion Paper

No. 2013-18 | February 26, 2013
Wage-Productivity Gap in OECD Economies

Abstract

The Walrasian theory of labor market equilibrium predicts that in the absence of any market frictions, workers earn a wage rate equal to their marginal productivity. However, this observation is not supported empirically for various economies. Based on the neoclassical tradition, the ratio of the marginal product of labor to real wages is generally defined as the Pigouvian exploitation rate. In this paper, the authors calculate this specific wage-productivity gap for the manufacturing sector in OECD economies and investigate its relation to the unemployment rate along with other variables such as government taxation, capital expansion, unionization, inflation. The authors find that the wage productivity gap gives a robust and significantly positive response to shocks to the unemployment rate and negative response to shocks to unionization.

Data Set

Data sets for articles published in "Economics" are available at Dataverse. Please have a look at our repository.

The data set for this article can be found at: http://hdl.handle.net/1902.1/20400

JEL Classification

J24 J30 J64

Cite As

Ceyhun Elgin and Tolga Umut Kuzubas (2013). Wage-Productivity Gap in OECD Economies. Economics Discussion Papers, No 2013-18, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2013-18

Assessment



Comments and Questions


Anonymous - Good Paper
February 28, 2013 - 18:54

I think it is a nice applied paper illustrating a novel result with a novel dataset. Even though, it is not surprising to me that MPL=w equality is quite distorted for OECD economies, the paper conducts an in-depth analysis of the factors that are associated with the MPL/w ratio. I ...[more]

... very much believe that the paper deserves publication; however I have 2 minor comments the discussion of which might add some more value to the paper:

1- The authors might extend the section on the theoretical framework a bit more and add an in-depth discussion of the search-theoretic literature.

2- Even though they dont have to present all the results of it, the authors might at least mention results of static panel data estimations (fixed-effects or random effects) or dynamic panel data estimations in the fashion of Arellano and Bond (1991)


Ceyhun Elgin - Reply to the reader comment
March 04, 2013 - 09:27

We will address your comments in the revised draft of the paper once we collect all the readers'/reviewers' comments and suggestions.


Anonymous - invited reader comment
March 02, 2013 - 10:13

See attached letter.


Ceyhun Elgin - Reply to the reader comment
March 04, 2013 - 09:27

We will address your comments in the revised draft of the paper once we collect all the readers'/reviewers' comments and suggestions.


Anonymous - Invited Reader Comment
March 25, 2013 - 09:36

see attached file


Anonymous - Reply
March 31, 2013 - 10:13

Thank you for your comments. We will address them in the revision.


Anonymous - Invited Reader Comment
April 09, 2013 - 08:11

see attached file


Ceyhun Elgin - Reply to the reader comment
April 09, 2013 - 08:28

Thank you for your comments. We will address them in the revision.


Anonymous - Referee Report 1
April 24, 2013 - 08:53

see attached file


Anonymous - Response Letter
May 05, 2013 - 16:11

Please see the attached response letter of ours.


Anonymous - Referee Report 2
April 24, 2013 - 08:56

see attached file


Anonymous - Response Letter
May 05, 2013 - 16:10

Please see the attached response letter of ours.