WAGE INFLATION IN THE UNITED KINGDOM 1948-62: A DISAGGREGATED STUDY.

That study threw up certain problems which required examination at a lower level of aggregation. For example, is there a significant relationship between the rate of change of unionisation (DELTAT) and the rate of change of money wage-rates (DELTAW) at industry level? Is it the case that across industries DELTATvaries directly with DELTAW? Suppose that a correlation between DELTAT and DELTAW exists in each industry, does the causal connection run from changes in wage-rates to changes in unionisation rather than the other way round? Granted our hypothesis about causality, can changes in unionisation be explained by the level of demand in each industry or by shifts in the composition of aggregate demand or by differential rates of growth of demand between industries? Shall we find that at this level of aggregation demand is in fact important and that in a multivariate analysis unemployment together with the cost of living as well as changes in wage-rates in lead sectors are significant determining variables and that the contribution of the union variable is negligible? This study is an attempt to contribute to the answers to those questions. The paper is divided into two sections and an appendix. The first contains a statement of the theory concerning the relationship between the rate of change of money wage-rates and unionisation, and presents evidence bearing on the relationship. It also advances hypotheses about the factors which influence union militancy as measured by this index. The second presents and estimates four single-equation models of the determination of wage-rates in each industry. In the appendix we analyse hypotheses concerning the determination of changes in unionisation which would, if they were correct, constitute refutations of our interpretation of the role of the union variable. The appendix also contains a discussion of the problems encountered in constructing the relevant indices used in this study, particularly that of the densi... [ABSTRACT FROM AUTHOR]