The Decline of Traditional Sectors in Israel: The Role of the Exchange Rate and the Minimum Wage

December 1, 1998

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Format: Chicago

Eric V. Clifton The Decline of Traditional Sectors in Israel: The Role of the Exchange Rate and the Minimum Wage, (USA: International Monetary Fund, 1998) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the role of exchange rate appreciation and the minimum wage in the relative decline of traditional sectors in Israel. It finds little evidence to indicate that real exchange rate appreciation is primarily responsible for this decline. Rather, the evidence indicates that slower productivity growth in traditional sectors has led to relatively larger increases in unit labor costs compared with high-tech sectors. Although the links are only indicative, the evidence also suggests that the minimum wage has played a role in the relatively faster growth in unit labor costs.

Subject: Labor, Labor costs, Labor productivity, Minimum wages, Production, Wage adjustments, Wages

Keywords: Exchange rate, Exchange rate appreciation, Export price, Firm, Global, High-tech firm, Israel, Labor costs, Labor productivity, Minimum wage, Minimum wage system, Minimum wages, Sector wage, Sectoral wage, Wage, Wage adjustments, Wages, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/167
Stock No:

WPIEA1671998
ISBN:

9781451858150
ISSN:

1018-5941

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