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Nominal wages matter a lot. And these days prices are not moving much and it is recognised that it is very important that they go up, a lot, for those at the bo

Nominal wages matter a lot. And these days prices are not moving much and it is recognised that it is very important that they go up, a lot, for those at the bottom. This is a contradictory argument. Real wages are the standard. If prices aren't changing much, then nominal wages are close to real wages and so they can't matter a lot as separate factor. The way nominal wages could matter is just if they are distinction from real wages and are able to give a (false) psychological feeling of wealth (things that go under the "wealth effect").

worik 8y ago
"Real wages are the standard." Standard for what? What are real wages? There is no "real wage" that can be compared across sectors very meaningfully. What really matters is access to the resources needed to live a fulfilled and healthy life. "Real wages" as measured by discounting nominal wages with a number called "inflation" is a indication of that access. It is imperfect because the measure of inflation is far from perfect. Duh! Social policy matters much more. Does society care about housing, education, health care, nutrition...? In many places accommodation cost inflation has wiped out many families. Proper housing policy would knock that on the head but in anglophone countries (and now it seems in West Germany too) it has been abandoned. But this study is not about that. Back to the point: Incomes matter. Wages are one indication of income. Purchasing power matters. Real wages are a indication of that. But a lot else matters. And studying nominal wages on their own is not a pointless task. Nominal wages can be compared across all sectors that use the same currency. Inflation, as a single number, can not. So looking at the changes in prices people face would be interesting too. But that is not what this study is about.
- skookumchuck 8y ago
  What you're reaching for is expressing wages in terms of "Purchasing Power Parity", or PPP. https://en.wikipedia.org/wiki/Purchasing_power_parity https://en.wikipedia.org/wiki/Purchasing_power_parity

worik 8y ago

"Real wages are the standard." Standard for what? What are real wages? There is no "real wage" that can be compared across sectors very meaningfully. What really matters is access to the resources needed to live a fulfilled and healthy life. "Real wages" as measured by discounting nominal wages with a number called "inflation" is a indication of that access. It is imperfect because the measure of inflation is far from perfect. Duh! Social policy matters much more. Does society care about housing, education, health care, nutrition...? In many places accommodation cost inflation has wiped out many families. Proper housing policy would knock that on the head but in anglophone countries (and now it seems in West Germany too) it has been abandoned. But this study is not about that. Back to the point: Incomes matter. Wages are one indication of income. Purchasing power matters. Real wages are a indication of that. But a lot else matters. And studying nominal wages on their own is not a pointless task. Nominal wages can be compared across all sectors that use the same currency. Inflation, as a single number, can not. So looking at the changes in prices people face would be interesting too. But that is not what this study is about.

skookumchuck 8y ago
What you're reaching for is expressing wages in terms of "Purchasing Power Parity", or PPP. https://en.wikipedia.org/wiki/Purchasing_power_parity https://en.wikipedia.org/wiki/Purchasing_power_parity