The Relationship between Productivity and Real Wage Growth in Canada and OECD Countries, 1961-2006
AbstractThe 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 InfoPaper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2008-08.
Date of creation: Dec 2008
Date of revision:
Find related papers by JEL classification:
- E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-24 (All new papers)
- NEP-BEC-2009-01-24 (Business Economics)
- NEP-EFF-2009-01-24 (Efficiency & Productivity)
- NEP-LAB-2009-01-24 (Labour Economics)
- NEP-MAC-2009-01-24 (Macroeconomics)
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- 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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- 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.
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