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2015•RePEc: Research Papers in EconomicsRequires access

Wage Growth, Inflation, and the Labor Share

Lisa Barrow, R. Jason Faberman

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Abstract

The recent pattern of nominal wage growth has been a puzzle to economists, researchers and policymakers because it lies well below the trend wage growth predicted by inflation and productivity growth. We show that the difference can be reconciled by accounting for the labor share of output, which has been on a declining trend for the past 15 years.

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The recent pattern of nominal wage growth has been a puzzle to economists, researchers and policymakers because it lies well below the trend wage growth predicted by inflation and productivity growth. We show that the difference can be reconciled by accounting for the labor share of output, which has been on a declining trend for the past 15 years.

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Available abstract

The recent pattern of nominal wage growth has been a puzzle to economists, researchers and policymakers because it lies well below the trend wage growth predicted by inflation and productivity growth. We show that the difference can be reconciled by accounting for the labor share of output, which has been on a declining trend for the past 15 years.

Key concepts: Wage growth, Economics, Wage share, Inflation (cosmology), Wage, Labour economics, Productivity, Efficiency wage

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