- 15 -

cut in real wage can result in output losses by adversely affecting the incentive to work.' A currency devaluation aimed at reducing real wages can be offset by productivity losses. Table 9 compares the data on real wage and the ratio of output to real wage per worker for five adjusters for which data are available. For the adjusters as a group, real wage per worker increased from 102 **in** 1978-82 to 111 in 1983-86. The output to wage ratio, however, increased from 100 to 122 (1980=100) during the same period. In Turkey, real wages fell from 111 in 1978 to 98 in 1986 (1980=100), but the output to wage ratio increased from 101 to 161 during the same period. In general, the impact of exchange rate adjustment on the labor market appears to be consistent with the export objectives of the tade programs.

**Tabc 9:** REAL WAGE **AND UN LAOR Cf** IN **THE MANCIrtG SECIVH** OF TM **AItfN COUNrR1S (19-I-)**

|**_RNl_Wqt**||||||||||Averwc||
|---|---|---|---|---|---|---|---|---|---|---|---|
|Per**Wkmr**|**1973**|**1V79**|**1910**|**1931**|**12**|**120**|19U|**1i**|19J6|19W6|**1963-**|
|**CIdWmba**|**109.3**|**1653**|**lO.**|**101.3**|**1**|**106.S**|117.3|**11I9**|**1511m**|**169**|**g0**|
|**tnsk**|**923**|**93.6**|**IO0.0**|**103**|**123.2**|**1264**|**127.5**|**1392**|143A|**103.4**|**1.6**|
|**Mcziw**|**L73.4**|ILU|**100.0**|**103.0**|**193.6**|**74.3**|n.6|**9S**|**_BSA_**|**101.9**|**11.2**|
|**Pikw**|59.4|**962**|IO.0|99J.|11139|119.3|1D0|124.2|**130.4**|97.9|**1242**|
||**110**6|**11015**|**1000**|1043|**97.3**|**96.0**|**K4**|**3L4**|**_963_**|**1016**|**00.**|
|**_A-._**|**100.9**|101.6|**100.0**|**2033**|**_196.3_**|**13.3**|105.0|IO3|**tZ.6**|**IO3**|**110.3**|
|**3m] Oipv/**||||||||||||
|**Rtal**WSWe|1973|**199**|**190**|**1931**|1912|**1933**|1916|**1i5**|**1M**|**I97W**|**1933-3**|
|**cdoma**|**363**|**995**|**1.o**|104.4|**9"1**|**93.**|**97.6**|**1105**|**19.**|**_97.3_**|**99.0**|
|TNk=!da|**93.3**|**127**|**1m.**|104A|953|**M103**|1013|la"|ICIL7|**90.**|**1W7**|
|''--io<br>g|**96.6**|997|**10.**|**96.5**|**96.6**|**12**|**133**|**27**|**lfl.9**|97.9|1345|
|**1'akira**|17.6|39.6|**10.**|IOIL6|**117.9**|114.0|**3.2**|116.6|**117.0**|**1.7**|**1151**|
|**1Tar1zy**|**1013**|**365**|**1mo**|1143|**123L9**|**133**|**156**|**170.6**|**100.7**|**16O2**|**2552**|
|Av:nW|93.2|95.6|**1000**|105.6|107.4|**116.9**|**124**|6|119.7|**1M4**|**_121.5_**|

**197W mispu.efti and** 190416 **aOm.n**

**_Smu_** : World **TaM. Wdrld Bamek**

20. It has been argued that a devaluation can be neutralized by an increase in wages. The estimates of the real wage equaion, with the real excmange rate and the employment level included as explanatory variables, are reported in Table 10. The data are ken fom World Bank tables. The estimate for the five adjusters, using pooled data, shows a significant correlaton between real devaluation and the real wage. A real devaluation is associated with a reduction in the real wage level after controlling for the effect of employment. The elasticity of wages, with respect to devaluation, is 17 See J. Stiglitz, "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Litature, March 1987.