Empirical studies at a firmor sector-level suggest that Foreign Direct Investment (FDI) increase wage dispersion by positively impact high skill wages. We contribute to the literature by examining the issue of FDI and wages on a large matched Swedish employer-employee data-set. Results suggest that foreign owned multinational firms (MNCs) tend to pay relatively high-skill wages, especially in c...

In a laboratory experiment we show that minimum wages have significant and lasting effects on subjects’ reservation wages. The temporary introduction of a minimum wage leads to a rise in subjects’ reservation wages which persists even after the minimum wage has been removed. Firms are therefore forced to pay higher wages after the removal of the minimum wage than before its introduction. As a c...

This paper uses longitudinal data of more than 13,000 firms to analyze the effects of on-the-job training on firm level productivity and wages. Workers receiving training are on average more productive than workers not receiving training. This makes firms more productive. On-the-job training increases firm level measured productivity between 1 and 2%, compared to firms that do not provide train...

When a worker is injured at work, he has to face a tough decision-making process about when and how to return to work (RTW). This study tests how the prospect theory can be applied to influence the injured workers' perceptions about this important choice. One hundred forty-one injured workers were presented with wage- and pain-related information in four different message framing (negatively or...

This paper provides non-technical summaries of theories which posit a relationship between aggregate employment and real wages and presents results from Australian and selected overseas empirical studies. Neoclasssical supply side theories assume that real wages, for given endowments of physical capital, primarily influence the cost of employing labour, and have an inverse relationship to aggre...

This paper aims at analysing the dynamic properties of real wages over the business cycle. We apply a Bayesian vector autoregressive (BVAR) model and analyse the possible asymmetric behaviour of real wages in response to different macroeconomic shocks. Finally, we use the NBER business cycle periodisation to evaluate how real wages interact with the different shocks during contractions and boom...

Alex Heath and the RBA's Prices, Wages and Labour section, and participants at an RBA seminar for helpful comments and suggestions; the errors remaining are our own. The views expressed in this paper are those of the authors and should not be attributed to the Reserve Bank of Australia.