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==Welcome==
Hi, welcome to Economics. Thanks for your edit to the [[:Real Wages]] page.

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Real Wages

71.59.224.26 — Wed, 02 Dec 2009 08:59:00 GMT

wrong word

← Older revision		Revision as of 08:59, December 2, 2009
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	: <math>Real~Wage\equiv \frac{Nominal~Wage}{Price~Level}</math>		: <math>Real~Wage\equiv \frac{Nominal~Wage}{Price~Level}</math>
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	[[Image:Labor_market.JPG\|frame\|Real wage: When price levels change the real wage changes as well. If inflation is used to stimulate the economy more labor will be demanded, conversly if the price level contracts, the result is a higher real wage.]]		[[Image:Labor_market.JPG\|frame\|Real wage: When price levels change the real wage changes as well. If inflation is used to stimulate the economy more labor will be demanded, conversly if the price level contracts, the result is a higher real wage.]]

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	* ''See also'' [[Phillips Curve]]		* ''See also'' [[Phillips Curve]]

-	An expansionary monetary policy can change price level downward in the short run through inflating the currency. Assuming that in the short-run workers do not fully understand the changes in wage level (irregardless of if they understand price level changes in general), then they will feel wealthier (the nominal wage is all which is taken into consideration ==> sticky). Employers, on the other hand, see wages as the price of an input, so they demand more workers.	+	An expansionary monetary policy can change price level downward in the short run through inflating the currency. Assuming that in the short-run workers do not fully understand the changes in wage level (irregardless of if they understand price level changes in general), then they will feel wealthier (the nominal wage is all which is taken into consideration ==> sticky). Employers, on the other hand, see wages as the price of an input, so they demand more workers.

	"Full" Employment is related to the concept of the [[Natural Rate of Unemployment]]. This could be the result of an [[Efficency Wage]] or as a result of some other condition where we see the employment of workers less than that which corresponds to those in the [[Labor Force]]. In reality the number of workers finding jobs is less than the number seeking them. See [[Unemployment]]		"Full" Employment is related to the concept of the [[Natural Rate of Unemployment]]. This could be the result of an [[Efficency Wage]] or as a result of some other condition where we see the employment of workers less than that which corresponds to those in the [[Labor Force]]. In reality the number of workers finding jobs is less than the number seeking them. See [[Unemployment]]
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	===Labor Heterogeneity: an objection===		===Labor Heterogeneity: an objection===
-	Not all workers are equally able to perform all tasks the same way. If this is true (not usually assumed in these models) than the idea of "one" labor supply curve would not make sense, much less aggregation accross an entire economy. If the wage changes, it is likely that an employer would be willing to higher a different type of worker.	+	Not all workers are equally able to perform all tasks the same way. If this is true (not usually assumed in these models) than the idea of "one" labor supply curve would not make sense, much less aggregation accross an entire economy. If the wage changes, it is likely that an employer would be willing to hire a different type of worker.

	==[[Real Business Cycles theory\|Real Business Cycle]]==		==[[Real Business Cycles theory\|Real Business Cycle]]==
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	Other studies: [[Supply Shocks]] create pro-cyclical wages and [[Demand Shocks]] create counter-cyclical wages		Other studies: [[Supply Shocks]] create pro-cyclical wages and [[Demand Shocks]] create counter-cyclical wages
-		+
	Robert Hall (1988) Productivity is Procyclical		Robert Hall (1988) Productivity is Procyclical

	The sum of the analysis according to stadler is that the labor market does not confirm or deny the RBC models.		The sum of the analysis according to stadler is that the labor market does not confirm or deny the RBC models.
-	==Indexing==	+	==Indexing==
	If inflation is high, people will pay more attention to the real wage and the change in the nominal wage will be less important. This is why the phillips curve is hyperbolic. With large changes in inflation the "total employment" solution could not be reached because people would have to much incentive not to be fooled.		If inflation is high, people will pay more attention to the real wage and the change in the nominal wage will be less important. This is why the phillips curve is hyperbolic. With large changes in inflation the "total employment" solution could not be reached because people would have to much incentive not to be fooled.

	==Sources==		==Sources==
	Stadler, George W. Real Business Cycles ''Journal of Economic Literature,'' Vol 32, No. 4 (Dec., 1994), 1750-1783 [http://links.jstor.org/sici?sici=0022-0515%28199412%2932%3A4%3C1750%3ARBC%3E2.0.CO%B2-2 Stable URL]		Stadler, George W. Real Business Cycles ''Journal of Economic Literature,'' Vol 32, No. 4 (Dec., 1994), 1750-1783 [http://links.jstor.org/sici?sici=0022-0515%28199412%2932%3A4%3C1750%3ARBC%3E2.0.CO%B2-2 Stable URL]
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	[[Category:Macroeconomics]]		[[Category:Macroeconomics]]

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Real Wages