This chapter deals with two important, distinct but very closely related macroeconomic problems: the determinants of the aggregate levels of real and money wages. Table 11.1 shows the annual rates of increase in both magnitudes between 1949 and 1988. It is evident from the table that changes in money wages are very much more volatile than variations in real wage growth. Note, too, the very sharp acceleration of money wage inflation between 1969 and 1970, again in 1974–5, and once more in 1979–80, each followed by a period of deceleration. As for real wage levels, the most noticeable feature is their continued growth throughout the 1980s, despite persistent heavy unemployment.
Unable to display preview. Download preview PDF.