Examining the Connection Between Real Wages, Labor Productivity, and Inflation Using Nonlinear Methods in the Case of Türkiye: New Evidence Based on Wavelet Decomposition

This study investigates the interrelationship between real wages, labor productivity, and inflation in Türkiye's manufacturing sector from 2005 to 2024, utilizing Fourier-based methods and wavelet decomposition. The analysis results indicate that inflation and the square of real wages reduce labor productivity, while real wages increase labor productivity. Furthermore, an inverted U-shaped relationship was found between wages and productivity. Fourier Granger causality results indicate a bidirectional causality relationship between the variables. In the short-term, the direction of causality is from inflation and the square of wages to labor productivity, while in the medium- and long-term, there is a reciprocal causality relationship.