A note on the nonlinear wages-productivity nexus for Malaysia

Tang, Chor Foon (2010): A note on the nonlinear wages-productivity nexus for Malaysia.

Abstract

This study is to empirically investigate the effect of real wages on productivity in Malaysia using monthly data from January 1983 to November 2009. The Johansen’s test suggests that wages and productivity are cointegrated. Moreover, productivity and real wages have a quadratic relationship in the long run (i.e., inverse-U shape curve) instead of linear relationship. Hence, the effect of real wages on productivity is not monotonic. Furthermore, the Granger causality test indicates that real wages and productivity is bilateral causality in nature.

• Item Type: MPRA Paper
• Language: English
• Keywords: Causality; Cointegration; Malaysia; Wages-Productivity
• Subjects: J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General

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