Degree Name

Master of Arts (MA)

Semester of Degree Completion

1998

Thesis Director

Timothy I. Mason

Abstract

The working class citizen is an important part of the United States. However, the manufacturing worker is getting paid less in real terms now, than in 1975. Because of this, working harder for less has become the battle cry of the blue collar worker. This study is focused on examining the decline in average real hourly wage in manufacturing.

The hypothesis of this paper is that large increases in female labor force participation rates have caused average real wages to fall since 1966. This hypothesis is examined through multiple regression analysis based on a model with three independent variables. The regression takes into account business cycle, productivity, and labor supply variables. Through examination of the statistics, this paper finds a negative relationship between the average real hourly wage and increases in labor force participation rates. Furthermore, the paper examines the marginal revenue product theory of labor, by showing at times, factors other than those linked to labor demand can be influential in wage determination.

This study is focused on the influence of labor supply on average real wage. It is a starting point for further examination into labor supply fluctuation. Furthermore, this study sets up a model for investigation into labor supply fluctuations of other countries.

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