Eckstein-Wilson Model Of Wage Determination

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Name- Drishti Priya
Course- 4MAECO
Roll No.- 1422024 The Eckstein-Wilson Model of Wage Determination - An Analysis
The wage determination model by the name of Eckstein-Wilson was propounded by Otto Eckstein, of the German origin along with Thomas A. Wilson, in 1952. The Eckstein-Wilson theory of wage determination is instrumental for the introduction of two notions which may be further helpful in the determination of the consequential regressions pertaining to/of the wage changes on the profit and the rates of unemployment. The two notions are as follows:
• There is an idea of a “key group” which shall constitute of various industries, which were technologically and institutionally similar in nature. As postulated, one of the attributes of the determination of wages is the present extant of various other significant industries and the bargaining in wages which shall be taken to be independent. The wage variations or changes within the industries lying outside the “key group” can be partly understood from the “Spillover Effect” from those falling within the ambit of “key group”.
• The second idea is applicable for the periods of bargaining of the wages for the key group member industries instead of the time period following the annual patterns in the compilation of the data.
The Eckstein-Wilson model was used in the context of the American Industries. The original paper was titled “The Determination of Money Wages in American Industry” in the year of 1952.

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