An Econometric Analysis of the Impact of Real Wages on Economic Growth in OECD Countries using the ARDL-PMG Model (2002-2022)

Subject and purpose of work This study aimed to analyze the impact of real wages, human capital, and public expenditure as a percentage of Gross Domestic Product (GDP) on economic growth in six Organization for Economic Co-operation and Development (OECD) countries over the period (2002-2022). Materials and methods The Panel ARDL model using PMG estimation was employed to test short- and long-term relationships among the variables. Results It was found that real wages have a negative and significant impact on long-term economic growth, while human capital has a positive and significant impact. Public expenditure as a percentage of GDP showed a negative but insignificant impact in the long term. Conclusions The studies’ results show that real wages have a prominent role in determining the economic growth rate within the OECD countries. Moreover, the research reveals that the governmental expenditure is a very important factor in stimulating the economic growth.