ABSTRACT
Changes in demographics, particularly the greater participation of women in the labor force, were also said to figure into the moderate wage growth that occurred during the 1980s. Annual changes in average hourly nominal earnings are explained econometrically by annual changes in the unemployment rate, capacity utilization, labor productivity, the gross national product (GNP) implicit price deflator, and the Consumer Price Index. The research focuses primarily on labor-market behavior and industrial relations practices that could explain the macroeconomic relationship between unemployment and wages and the effect of this relationship on output and employment stability. The GNP implicit price deflator captures changes in producer prices, which also reflect employers’ ability to pay higher wages. Changes in wage behavior could be related to differences in the demographic composition of the labor force, because demographic groups may differ in their responses to labor-market conditions. The chapter also presents an overview of the key concepts discussed in this book.
