A Study on the Interrelationship between Wages, Employment, and Growth

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This paper analyzes the relationship between wages, employment, and GDP using mainly Granger causality test. We know that increasing employment leads to stable growth. This paper expands the idea to the developing country, Indonesia and developed country, Singapore and we compare the results. With this, we are interested in finding out whether Indonesian manufacturing data and Singapore data support the economic theory. We can interpret with the result that developing country such as Indonesia is not easy to assert firmly that increasing wage makes increase employment which is a motivation to the growth of Indonesia. The test results with Singapore data show more positive way in supporting the theory regarding the results of Granger causality than the test result of Indonesia.