Title: Influences of US real GDP growth and labour productivity on manufacturing real wages

Authors: Muhammad Mustafa; Matiur Rahman

Addresses: South Carolina State University, Orangeburg, SC 29117, USA ' McNeese State University, Lake Charles, LA 70609, USA

Abstract: This paper re-examines the dynamic casual nexus among real manufacturing wage rate, labour productivity and real GDP growth. Data from 1987 Q1 through 2011 Q2 are utilised by implementing the fairly standard cointegration methodology in a trivariate setting. All three variables are non-stationary depicting I (1) behaviour. There are evidences of at least one cointegrating relationship among the variables, based on both λtrace and λmax tests. The estimates of vector error-correction models show the weakest long-term causal flow from labour productivity and real GDP growth to real wage rate in the US manufacturing sector. Such causal flow is the strongest from manufacturing real wage rate and labour productivity to US real GDP growth. The influence of manufacturing real wage and real GDP growth on labour productivity falls in between. In all cases of vector error-correction models, there are evidences of short-run net positive interactive feedback effects in varying degrees.

Keywords: real GDP growth; gross domestic product; labour productivity; manufacturing wages; real wages; cointegration; causality; USA; United States.

DOI: 10.1504/IJEBR.2013.052489

International Journal of Economics and Business Research, 2013 Vol.5 No.3, pp.337 - 346

Published online: 30 Dec 2013 *

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