Wages in a factor proportions time series model of the US

Abstract

The theoretical effects of changes in prices and factor endowments on wages in general equilibrium models have been examined under various assumptions. The present paper is the first to estimate wage effects in the context of this theory. The data cover the US real wage, labor force, fixed capital assets, energy input, and prices of manufactures and services from 1949 to 2006. Estimated input elasticities of the wage are consistent with labor in the middle of the factor intensity ranking, and energy as very intensive in manufacturing. The estimation technique quantifies fundamental influences on the labor market.