oa Wage-led Growth: The Dynamics And Rigidity Of Gross Mean Wage In Lithuania

Wage-led growth: the dynamics and rigidity of gross mean wage in Lithuania Gediminas Mačys Professor of Economics, Dr. Institute of Economics and Business, Mykolas Romeris University, Lithuania Ateities str. 20, LT-08303 Vilnius, Lithuania www.mruni.eu; [email protected] tel. No. +3705 2714547 & Member of American Association of International Researchers (AAIR, New York, USA) Member of Global science and technology forum (GSTF, Singapore), Member of Regional Studies association (RSA, London, UK) Objectives 1) to analyse econometrically the relation between different contributors and the gross average wage. 2) Using the simple polynomial model, to analyse the dynamics of real wage rigidity 3) to propose the long-term, pro-labour policy means that would soften the real wages rigidity and the increase the wage share. Method. The paper presents the regressive analysis of real wage driving factors. The analysis confirmed an existence of strong, linear relationship between the GMW and three driving factors. The multinomial logit model of GMW rigidity has been applied in current research. Data. Both the wages and economic growth driving factors in Lithuania are based on panel data from 2002-2013 and were withdrawn from the Lithuanian national statistic surveys and individual surveys have been subjected to the Lithuanian business and household entities. The measures of downward nominal and real wage rigidity are derived on the basis of individual wage change distributions observed in household survey. Results. A strong linear relation of the real average wage and three driving factors was found. It circumstantiates that the economy of country is export-sided. The analysis found a strong rigidity of the real wage and the stiffening of rigidity over past few years in Lithuania. A shift in the bargaining power of the employers to the employees was found too. The application of wage-led growth model to Qatar economy is on the subject of paper discussion. The points of reference to pro-labour policy means that would soften the real wages rigidity and the increase the wage share in Qatar are discussed too. Conclusions. The regressive analysis of real average wage has revealed the strong linear dependence from three factors. Such permutation of the real average wage driving factors is normally appropriate for the small country that economy draws the strong export sector, i.e. the economy of Lithuania is mostly export-sided. The wage rigidity is a binding constraint on wage setting for large segments of the work force in a low inflation environment like a Lithuania period. In the Lithuania a shift in the bargaining power of the employers to the employees was found. The upward pressure on wages was caused by the decline in unemployment and is a result of strongly improved job market position of employees in Lithuania. Keywords: econometric analysis, dynamics of real average wage, rigidity of real average wage, wage-led growth, means of pro-labour policy.