Linkage and Causality between Wages and Productivity: A Panel Analysis of U.S. Manufacturing in the Interwar Period
This paper analyses the linkage and causality between real wages and labour productivity. Higher real wage growth can raise the incentive of firms to save labour,thereby increasing output per hour worked. Cointegration analysis of a panel of 19 manufacturing industries in the United States for the years 1919 - 1939 suggests strong linkage and bidirectional Granger causality between the two variabl
