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Wage structure is the array of prices determined for labor market skills and the rewards to employment in particular sectors.

It refers to a situation when prices gallop higher?perhaps because of a sudden shock or policy missteps, or both?and wages race upward to keep pace with them, in turn feeding through to yet more price rises and yet more wage increases, and so on in a vicious circle.

The wage-price spiral is a theory in macroeconomics that reflects the consequential relationship between prices and wages as well as inflation, in that a rise in wages has an effect on the prices of goods. Once wages increase, the prices of goods follow suit, they also increase.

There are three main factors affecting the supply of labour: changes in income, expectations, and population. The elasticity of supply of labour measures the proportionate change in the supply of labour when there is a change in the wage rate.

If the minimum wage of an economy increased, for example, it would cause consumers within the economy to purchase more product, which would increase demand. The rise in aggregate demand and the increased wage burden cause businesses to increase the prices of products and services.

Example #2 In the 1970s, the American economy. read more experienced a spiral in wage-price caused by the high oil prices of OPEC in the 1970s. The rising oil prices led to inflation it is the US economy. In addition, the increasing oil prices resulted in wage hike demand by the unions.

Formula In w = ? 0.1 In U + other terms, where In w is the logarithm of the wage, and In U is the logarithm of the unemployment rate in the worker's area.

We define a wage-price spiral as an episode where at least three out of four consecutive quarters saw accelerating consumer prices and rising nominal wages.