Are Wages in Manufacturing Sector of Iran Determined by Productivity?

The main concern in all economic activities is to obtain maximum output using minimum resources. That is the reason why the wages should be set with respect to productivity. To what extent the wages in practice are set in accordance with productivity is the main subject of our study. We use the survey of large manufacturing establishment’s data set for twenty two industries during 1373-1384 (1996-2005) to estimate the wage equation. Our findings indicate that there is some significant relation between wage, productivity, skills and education. However, labor productivity has trivial role in wage determination in comparison to other explanatory variables