The effects of wage volatility on growth

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dc.citation.epage103
dc.citation.journalTitleJournal of Macroeconomicseng
dc.citation.spage93
dc.citation.volume37
dc.contributor.affiliationSchool of Economics and Finance, Universidad EAFITspa
dc.contributor.affiliationDepartment of Economics, Lehigh Universityspa
dc.contributor.affiliationDepartment of Economics, University of Memphis.spa
dc.contributor.authorJetter, Michaelspa
dc.contributor.authorNikolsko-Rzhevskyy Alexspa
dc.contributor.authorSmithc William T.spa
dc.contributor.departmentEscuela de Economía y Finanzasspa
dc.contributor.departmentEconomíaspa
dc.contributor.programEstudios en Economía y Empresaspa
dc.date2013-09
dc.date.accessioned2015-11-06T16:26:26Z
dc.date.available2015-11-06T16:26:26Z
dc.date.issued2013-09
dc.description.abstractThis paper shows that the volatility of wages has significant effects on a country’s rate of economic growth. Our theoretical framework suggests two distinct channels in which wage volatility affects growth: a positive direct way and a negative indirect way. The direct effect stems from precautionary savings, whereas the indirect effect works through the mediating role of government size. In the empirical part, we use a 3SLS approach to analyze a panel of 20 high-income OECD countries and find strong evidence for the existence of both effects. These results carry general and specific implications. In general, ignoring indirect effects operating through government size may mask the real net effects of volatility on growth, which could result in misleading conclusions. Specific to wage volatility, our results suggest that the net effect on economic growth depends on both government size and the wage premium from working in the private sector. Within our sample, we find evidence for both – countries for which wage volatility is beneficial to growth and others for which it is detrimental.eng
dc.identifier.doi10.1016/j.jmacro.2013.05.010
dc.identifier.issn0164-0704
dc.identifier.urihttp://hdl.handle.net/10784/7538
dc.language.isoengeng
dc.publisherElseviereng
dc.relation.ispartofJournal of Macroeconomics. Vol.37, 2013, pp.93-103spa
dc.relation.isversionofhttp://www.sciencedirect.com/science/article/pii/S0164070413000967
dc.relation.urihttp://www.sciencedirect.com/science/article/pii/S0164070413000967
dc.rightsrestrictedAccesseng
dc.rightsCopyright © 2013 Elsevier Inc. All rights reservedspa
dc.rights.accessrightsinfo:eu-repo/semantics/restrictedAccesseng
dc.rights.localAcceso restringidospa
dc.sourceJournal of Macroeconomics. Vol.37, 2013, pp.93-103spa
dc.subject.keywordEconomic growtheng
dc.subject.keywordVolatilityeng
dc.subject.keywordGovernment sizeeng
dc.subject.keywordWageseng
dc.subject.keyword3SLSeng
dc.titleThe effects of wage volatility on growtheng
dc.typearticleeng
dc.typeinfo:eu-repo/semantics/articleeng
dc.typeinfo:eu-repo/semantics/publishedVersioneng
dc.type.hasVersionpublishedVersioneng
dc.type.localArtículospa

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