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The Relationship between Productivity and Real Wage Growth in Canada and OECD Countries, 1961-2006

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Author Info

  • Andrew Sharpe

    ()

  • Jean-François Arsenault

    ()

  • Peter Harrison

    ()

Abstract

The most direct mechanism by which labour productivity affects living standards is through real wages, that is, wages adjusted to reflect the cost of living. Between 1980 and 2005, the median real earnings of Canadians workers stagnated, while labour productivity rose 37 per cent. This report analyzes the reasons for this situation. It identifies four factors of roughly equal importance: rising earning inequalities; falling terms of trade for labour; a decrease in labour’s share of GDP; and measurement issues. This report also explores the relationship between labour productivity and real wages by province and by sector, as well as in the United States and in other high-income countries.

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Bibliographic Info

Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2008-08.

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Date of creation: Dec 2008
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Handle: RePEc:sls:resrep:0808

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Related research

Keywords: Productivity; Real Wages; Earnings; Labour Share; Inequalities;

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Cited by:
  1. Andrew Sharpe & Alexander Murray & Benjamin Evans & Elspeth Hazell, 2011. "The Levy Institute Measure of Economic Well-Being: Estimates for Canada, 1999 and 2005," CSLS Research Reports 2011-09, Centre for the Study of Living Standards.
  2. Jakub Growiec, 2009. "Determinants of the Labor Share: Evidence from a Panel of Firms," National Bank of Poland Working Papers 69, National Bank of Poland, Economic Institute.
  3. Andrew Sharpe & Alexander Murray & Benjamin Evans & Elspeth Hazell, 2011. "The Levy Institute Measure of Economic Well-Being: Estimates for Canada, 1999 and 2005," Economics Working Paper Archive wp_680, Levy Economics Institute.
  4. Andrew Sharpe & Jean-Francois Arsenault & Peter Harrison, 2008. "Why Have Real Wages Lagged Labour Productivity Growth in Canada?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 16-27, Fall.

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