Comparative Analysis of Traditional & Modern Wage- Productivity Theories in Industrial Sector of Iran's Economy Using Gewek Linear Feedback Method

Considering statistical data during 1981-2007 in Iran's economy shows some co-movements between per capita wage and productivity indices, but does not explain which one can explain productivity improvements. Whether productivity increase is the result of wage increase, or its increase have caused wage increase, or we can not explain their relationship in causal relationship. Since productivity increase is very important in developing economies, we reviewd related literature, and finally we used Gewek's econometric model for comparing traditional and modern theories for industrial sector of Iran's economy, to see which theory is more applicable. Results indicate both wage productivity theories are statistically significant in industrial sector of Iran's economy, but modern wage- productivity theory is more applicable when compared with traditional one.