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- Title
WAGE-PRICE RELATIONS AT HIGH LEVEL EMPLOYMENT.
- Authors
Dunlop, John T.
- Abstract
During much of the early 1930s economic literature was concerned with wage-price relations in the context of a wage rate reduction. While all the theoretical issues have not been resolved, there is now surprising agreement among economists that the reduction of the general level of wage rates is not appropriate policy during periods of unemployment. During the 1940s the focus of the discussion has shifted, under the press of affairs, to the relation between wages and prices during periods of high level employment. In the absence of controls, wage rates respond to increasing employment, and prices are stimulated by rising aggregate income levels. As a consequence, in order to maintain full employment it is necessary that the money demand schedule for labor shall not merely be high, but shall be continually rising, spiralling upwards forever, so that it keeps ahead of the pursuing wage rate. This entails progressive monetary inflation and so, unless productive technique is improving at corresponding speed, continuously rising prices.
- Subjects
UNITED States; INCOMES policy (Economics); EMPLOYMENT; FULL employment policies; ANTI-inflationary policies; LABOR market; WAGES; DEMAND for money; ECONOMICS literature
- Publication
American Economic Review, 1947, Vol 37, Issue 2, p243
- ISSN
0002-8282
- Publication type
Article