The long‐run and dynamic behaviors of wages, productivity and employment in Malaysia

Abstract

Purpose -This paper aims to examine the long-run and dynamic behaviors of real wage-employment-productivity relationship, using Malaysian manufacturing data, and to determine which related labor theories are supported. Design/methodology/approach -Time-series econometric techniques, which include stationarity and cointegration tests, vector error correction model, impulse response function and variance decomposition, are applied to analyze the relationships of real wages, employment and productivity. Findings -A long run relationship exists between real wages, employment and real productivity, with real wages being the main variable that adjusts to maintain cointegration. The theory that real wages inversely affect employment is not supported, while the performance-based pay scheme theory, and not the efficiency wage theory, is validated. Research limitations/implications -Although the data used to measure wages and employment account for most of the production in the various manufacturing sectors, they do not include all the manufacturing industries. The analysis is also limited in time span since data for earlier periods are not available. Practical implications -The findings can provide assistance to policy makers in their implementation and evaluation of labor policies. Originality/value -The real wage-employment-productivity relationship is examined in the framework of the Malaysian manufacturing sector, and the study includes both the long-term and short-run behaviors of the variables.

Productividad laboral y salario real: relaciones de causalidad en Venezuela

“…Un modelo de corrección de errores revela que en el corto plazo la elasticidad de la productividad a cambios en el salario real es de 0.73. Yusof (2008) está entre los pocos estudios que usa datos trimestrales (1992:1-2005:3), en este caso para la economía de Malasia. El estudio encuentra una relación de largo plazo entre la productividad laboral, el empleo y el salario real.…”

Productivity as a Determinant of Labour Wage in New Zealand’s Construction Sector

“…They report that LP growth is a key determinant for wage growth but also find a causal link in the opposite direction. Yusof (2008) examines the long-run relationship between RW, employment and productivity in Malaysia's manufacturing sector. The analysis results reveal a long-run relationship among the parameters.…”

Features of the assessment of factors influencing productivity

“…The positive relation between productivity, wage and unemployment Turkey, United Kingdom 1955-19912007Strauss & Wohar, 2004Yusof, 2008;Trpeski & Tashevska, 2009; Karaalp-Orhan, 2017.…”

“…The negative relation between wage and employment Malaysian industry 1992Malaysian industry -2005 The relation between price level, wage and productivity over a long period of time USA (at branch level) The relation between wage, labour costs and productivity EU, The Republic of Macedonia, Slovenia 1960-20011995-2007 The results of scientists (Strauss & Wohar, 2004;Yusof, 2008;Trpeski & Tashevska, 2009; Karaalp-Orhan, 2017) research shows that there is a relation between productivity, wage, employment/unemployment, prices level and labour costs. Wage and unemployment have a significant positive long-term impact on productivity.…”