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Did Wages Reflect Growth in Productivity?

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  • Feldstein, Martin
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    Abstract

    The level of productivity doubled in the U.S. nonfarm business sector between 1970 and 2006. Wages, or more accurately total compensation per hour, increased at approximately the same annual rate during that period if nominal compensation is adjusted for inflation in the same way as the nominal output measure that is used to calculate productivity. Total employee compensation as a share of national income was 66% of national income in 1970 and 64% in 2006. This measure of the labor compensation share has been remarkably stable since the 1970s. It rose from an average of 62% in the decade of the 1960s to 66% in the decades of the 1970s and 1980s and then declined to 65% in the decade of the 1990s where it has again been from 2000 until the most recent quarter.

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    Bibliographic Info

    Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 2794832.

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    Date of creation: 2008
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    Publication status: Published in Journal of Policy Modeling
    Handle: RePEc:hrv:faseco:2794832

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    Cited by:
    1. Duarte, Rita & Marques, Carlos Robalo, 2009. "The dynamic effects of shocks to wages and prices in the United States and the euro area," Working Paper Series, European Central Bank 1067, European Central Bank.
    2. Javier J. Pérez & A. Jesús Sánchez, 2009. "Is there a signalling role for public wages? Evidence for the euro area based on macro data," Banco de Espa�a Working Papers, Banco de Espa�a 0934, Banco de Espa�a.
    3. Mefford, Robert N., 2009. "Increasing productivity in global firms: The CEO challenge," Journal of International Management, Elsevier, Elsevier, vol. 15(3), pages 262-272, September.
    4. Kumar, Saten & Pacheco, Gail, 2012. "What determines the long run growth rate in Kenya?," Journal of Policy Modeling, Elsevier, Elsevier, vol. 34(5), pages 705-718.
    5. Freddy, Liew, 2011. "Productivity-wage-growth nexus: an empirical study of Singapore," MPRA Paper, University Library of Munich, Germany 34459, University Library of Munich, Germany.
    6. Peeters, Marga & Den Reijer, Ard, 2011. "On wage formation, wage flexibility and wage coordination : A focus on the wage impact of productivity in Germany, Greece, Ireland, Portugal, Spain and the United States," MPRA Paper, University Library of Munich, Germany 31102, University Library of Munich, Germany.
    7. Margarita Katsimi & Sarantis Kalyvitis & Thomas Moutos, 2009. ""Unwarranted" Wage Changes and the Return on Capital," CESifo Working Paper Series, CESifo Group Munich 2804, CESifo Group Munich.
    8. Boudreau, James W., 2010. "Stratification and growth in agent-based matching markets," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 75(2), pages 168-179, August.
    9. Thomas Kemeny & Michael Storper, 2012. "Specialization and Regional Economic Development," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0121, Spatial Economics Research Centre, LSE.
    10. Laurian LUNGU, 2011. "The Romanian economy - four years afterthe EU accession," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, Centre for European Studies, Alexandru Ioan Cuza University, vol. 2, pages 31-48, December.
    11. Manuela Goretti, 2008. "Wage-Price Setting in New EU Member States," IMF Working Papers, International Monetary Fund 08/243, International Monetary Fund.
    12. Bental, Benjamin & Demougin, Dominique, 2010. "Declining labor shares and bargaining power: An institutional explanation," Journal of Macroeconomics, Elsevier, Elsevier, vol. 32(1), pages 443-456, March.
    13. Sotirios Theodoropoulos, 2011. "A Wage Policy for External Balance and Employment in EMU Environment: A Theoretical Approach," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 61(3-4), pages 85-102, July - De.
    14. Lamo, Ana & Pérez, Javier J. & Schuknecht, Ludger, 2013. "Are government wages interlinked with private sector wages?," Journal of Policy Modeling, Elsevier, Elsevier, vol. 35(5), pages 697-712.

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