Real Wages in Bangladesh

Abstract

The paper seeks to offer an explanation for the observed oscillations in the real wages of unskilled labour in Bangladesh. Within the framework of a model of lagged adjustment of expectations, variations in real wages are shown as a function of (I) fluctuations in the rate of inflation, (II) fluctuations in the average product in agriculture, (ELI) variations in the mode of government intervention by way of changes in the minimum wage laws, etc. , and (IV) fluctuations in the state of the economy. Even though real wages are not supposed to show any marked changes in labour surplus economies like Bangladesh, the paper analyses the mechanism through which wages are seen to track inflation and changes in the domain of production in the countryside even in such economies.