From: Andrew Trigg
In reply to: Iwao
Thanks for your very pertinent question.
(in 3049)
In the micro approach I propose, multiples of different labour types are
reduced to simple labour - young unskilled workers of basic education.
The higher wage returns from more skill, age and education are viewed as
multiple increases in labour quality.
However, you are right that wage rates are not necessarily proportional to
value created and this is a possible problem with previous methods of
calculating labour values/labour embodied, which assume that wages and
value created are proportional. To get around this problem the micro
approach decomposes the wage into two parts: a part which is correlated with
labour quality and a [a
part which is not. The wage equation regresses
wages on characteristics which represent both these influences on the wage.
The objective is to control for the non-quality related factors such as
your change in management policy. e.g. if the wage equation was run
over the 1980s the ascendency of management could be to some extent
controlled for by, say, a variable showing the number of days lost
through strikes, or the number of strikes. Obviously there will always
be severe data limitations since a large part of the variation in
wages cannot be predicted by a regression equation; but it might just
improve on approaches which just use raw wages.
I would be interested to know if there is much of a literature on
wages and the structure of class relationships in Japan.
M.thanks.
Andrew.