User:Jeer1002/OLES2129/draft
Hello. This is my draft folder for my article on Wage Growth.
My topic for my OLES2129 assessment is Wage Growth as part of Wikipedia:WikiProject_Economics on Wikipedia. This article is being created because of (insert proposal).
Wage Growth[edit]
In economics, wage growth (also known as Wage-Push Inflation) refers to the increase in wages over a given period of time. [1]
Factors[edit]
Factor which influence Wage Growth[edit]
- Increased Demand for Labour - Based on the theory of supply and demand, if the demand for labour increases the demand curve will shift right and hence lead to a higher equilibrium point with both a higher quantity of labour (number of employees) and price of labour (wages).
- Inflation - An increase in inflationary pressures within the economy causes the cost to produce goods and services to increase. In an attempt to counter the effect of rising costs of goods and services, firms increase the price of their goods and services within the product market. Ceteris Paribus, firms will be receiving higher profits for each unit sold. As such, employees will demand higher wages since firms are earning higher profits. [2]
- Labour Productivity - When there is more productivity within the labourforce, more output can be produced over the short run. As such, since firms will be drawing more profit, in the long run, firms can afford to pay their employees higher wages. [3]
- Minimum Wage - The minimum wage is a binding price floor set by the government stating the minimum amount firms pay. As such, wage growth in the short run will increase for those who are paid below the set minimum. [4]
- Terms of Trade - The terms of trade is a ratio of an economy's export price index given its import price index. It is also an indicator of the ratio of the amount of exports that can be bought given a set of imports. When the terms of trade appreciates, it is an indicator of economic growth in the economy and an increasing amount of profit towards firms. As such, firms receiving higher profits from overseas can afford to pay for higher wages. [3]
- Trade Unions - Trade unions influence the supply of labour within the economy and legally bargain for higher wages on behalf of employees.
Policy Implications for Wage Growth[edit]
Here will be the policy implications for wage growth[5].
Effects of Wage Growth[edit]
Effects of wage growth include:
- Labour Productivity
- Increased Supply of Labour
Measurements of Wage Growth[edit]
Wage Price Index[edit]
The Wage Price Index (often abbreviated as WPI) is a price index which measures the changes in the price of labour for both wages and salaries overtime as a result of the market forces within the economy, that is, the supply and demand for labour. [6] Estimates for the WPI based on private and public sector occupations are published quarterly. Similar to the Consumer Price Index, the Wage Price Index is aimed at analysing the price changes on a 'fixed basket' of jobs. The 'fixed basket' of jobs is unaffected by any changes in the quality and quantity of labour within the economy as well as any changes in the demographic of the labourforce over a given period of time. [7] Wage growth is calculated by the change in the WPI between the current WPI and the base WPI (usually the last quarter's WPI).
Real Wage Growth vs Nominal Wage Growth[edit]
This will be where the economic theory behind real wage growth and nominal wage growth will be.
Main Article: Real vs Nominal Values
Nominal wage growth refers to the increase in nominal wages, that is, the value of net wages over a given period of time. [8] Real wage growth refers to the increase in real wages, that is, the increase in the level of wages that have been adjusted for inflation over a given period of time. In other words, the purchasing power of wages.
Using the formula for calculating the real value for economic statistics, the real value of wages can be calculated using the following formula:
History of Wage Growth in Australia[edit]
Mining Boom Mk1[edit]
Global Financial Crisis[edit]
Mining Boom Mk II[edit]
Mining Boom MkII
European Sovereign Debt Crisis[edit]
Recent Years[edit]
Recent Years as described by the Reserve Bank of Australia (RBA) [9] and the Australian Bureau of Statistics [10]. In 2019, it is predicted that wage growth is expected to accelerate by almost a third in the resources sector due to a rise in demand for employees in the mining sector [11].
History of Wage Growth in the United States[edit]
Global Financial Crisis[edit]
Recent Years[edit]
- ^ Kenton, Will. "Wage Push Inflation". Investopedia. Retrieved 2019-03-27.
- ^ "The Relationship between Wage Growth and Inflation". www.stlouisfed.org. Retrieved 2019-03-27.
- ^ a b Angus, Chris (August 2017). "Slow Wage Growth" (PDF). Retrieved 2019-03-28.
- ^ Bishop, James (September 2018). "The Effect of Minimum Wage Increases on Wages, Hours Worked and Job Loss" (PDF). Retrieved 2019-03-27.
- ^ Nunn, Jay C. Shambaugh and Ryan (2018-04-17). "Policy actions that would revitalize wage growth". Brookings. Retrieved 2019-03-25.
- ^ "Wage Price Index – December Quarter 2018". 20 February 2019. Retrieved 2019-03-28.
- ^ Statistics, c=AU; o=Commonwealth of Australia; ou=Australian Bureau of (2018-02-12). "Main Features - Wage Price Index". www.abs.gov.au. Retrieved 2019-03-31.
{{cite web}}: CS1 maint: multiple names: authors list (link) - ^ "OECD Glossary of Statistical Terms - Nominal wages (annual averages of hourly, daily, weekly or monthly wages) Definition". stats.oecd.org. Retrieved 2019-03-28.
- ^ Arsov, Ivailo (March 2018). "Wage Growth in Advanced Economies" (PDF). Retrieved 2019-03-27.
- ^ Scutt, David (2019-02-20). "Australian wages are still going nowhere". Business Insider Australia. Retrieved 2019-03-27.
- ^ Marin-Guzman, David (2019-01-20). "Mining to 'drive wage growth' in 2019". Australian Financial Review. Retrieved 2019-03-27.