Jurnal Ekonomi Malaysia
32 1998 21 – 37
Fakulti Ekonomi
Universiti Kebangsaan Malaysia
43600 UKM 8angi
Selangor Darul Ehsan
Fakulti Ekonomi
Universiti Kebangsaan Malaysia
43600 UKM 8angi
Selangor Darul Ehsan
Abstract
This paper examines the relationship between wage, price and labour productivity in Malaysia between 1970-1994. The existence of a long run relationship between those variables is confirmed through use of the cointegration approach. This study uses a dynamic short-term ECM model. The model is based on the integration equation which was estimated using Granger and Engle two-step procedure. There are two major research findings. First, wage increases proportionately with price in the long run. In the short run, however; there is tendency for wage increase to exceed price. Secondly, when the effect of price changes is taken into account, wage increases at a rate proportionate to that of the long run labour productivity. The long run wage elasticity with respect to labour productivity is 0.76 and it is not statistically different from unity. In the short run, an increase in labour productivity will be followed by a larger increase in current wage. The current wage together with lagged effects resulted in a huge increase in short term wage. The resulting disequilibrium, however, is temporary and is completely adjusted in less than four years. This study uses these findings to evaluate the National Labour Council (NLAC) proposed wage reform. Based on the research findings, this paper concludes that reform is unnecessary, The difficulties involved in implementing the reform imply that there is not much difference in the relationship between wage and productivity with the existing wage setting mechanism.
Bibliography
@article{jusoh1998upah,
title={Upah Agregat dan Produktiviti Burnh di Malaysia:Penganggaran Model Penentuan Upah dengan Pendekatan Kointegrasi},
author={jusoh, mansor and fah, chew yuet},
journal={Jurnal Ekonomi Malaysia},
volume={32},
number={},
pages={21—37},
}
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