Application Of The Input-output Price Model Based On Wage Hike

Input-output Price Model can be applied to study the affect on the price system caused by the change of all sectors'laborer compensation, depreciation, net production tax and business surplus, which are in the third quadrant in the input-output tables as primary input or added value. This model has its advantages in studying price changes and fluctuation effect through substantial description of the adjustment of the primary input or added value.With the models above, this paper studied the effect of wages adjustment under the background of our country's lowest wage raise in all sectors in every province in 2010. Firstly, this paper introduced the basic theories and methods of Input-output, and then brought in Input-output Price Model and detailed models used in this research.In analyzing the effect on price index of wage adjustment, this paper made a consumption price index to reflect it. The result showed that the increase of real wage is little, about 4%,due to the price increase accompanying the wage adjustment. It also found that wage adjustment could promote consume and production .And the research has great help in decision making for enterprises and the government. This paper also brought in a new application of Input-output Price Model. It can be used to study commodity's Income Elasticity of Demand, and this method is different from the econometric model with micro data of family consume.