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real wage resistance


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Difficulty in reducing real wages. This can be explained by the opposition of trade unions to accepting wage settlements that do not at least compensate for price increases since the last agreement, and through employers knowing that workers dislike accepting reductions in their real incomes: wage offers involving real reductions are thought to be bad for morale, so employers are reluctant to make them. Real wage resistance obstructs adjustments in the structure of relative wages when these are necessary, and makes it difficult to bring an inflationary spiral to an end.

Subjects: Economics.


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