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  3. Journal of Economic Perspectives
  4. Spring 1998
  5. Real and Money Wage Rates

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Real and Money Wage Rates

  • John T. Dunlop
Journal of Economic Perspectives
vol. 12, no. 2, Spring 1998
(pp. 223–234)
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Abstract

In the General Theory, John Maynard Keynes held money and real wage rates move in opposite directions. In expansion, prices increase faster because of increasing costs and a rise in the proportion of product going to profits. Neoclassical economists held similarly. Money illusion of workers supported their common view. The author's 1938 article rather showed a procyclical pattern, significant to macroeconomic models of the economy. Contemporary literature with new elements of compensation and new measures of wages supports a slightly procyclical relationship. Increased output and employment in expansion do not require lower real wages.

Citation

Dunlop, John T. 1998. "Real and Money Wage Rates." Journal of Economic Perspectives 12 (2): 223–234. DOI: 10.1257/jep.12.2.223

JEL Classification

  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital