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Unions and the wage-productivity gap

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  • Madeline Zavodny

Abstract

Although both real wages and productivity have been growing at relatively slow rates during the last two decades, some measures indicate that earnings have failed to keep up with productivity growth. The slowdown in real wage growth is important to workers and their families because their purchasing power is not rising if earnings are not increasing faster than prices. The failure of growth in real wages to match productiv-ity gains also has critical implications for workers. ; A substantial decline in the unionization rate since the 1960s has been cited as underlying the wage-productivity gap. This article explores the trends in productivity, pay, and the unionization rate, analyzing data over the 1974-94 period. The author concludes that the decline in the unionization rate does not explain a significant portion of the rise in the wage-productivity gap in the manufacturing sector. A resurgence of unions might help workers reap more benefits from productiv- ity gains, but it appears unlikely that an increase in the unionization rate alone would cause compensation increases to fully match productivity gains.

Suggested Citation

  • Madeline Zavodny, 1999. "Unions and the wage-productivity gap," Economic Review, Federal Reserve Bank of Atlanta, issue Q2, pages 44-53.
  • Handle: RePEc:fip:fedaer:y:1999:i:q2:p:44-53:n:v.84no.2
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    Cited by:

    1. Ceyhun ELGİN & Tolga Umut KUZUBAŞ, 2012. "Wage-Productivity Gap in Turkish Manufacturing Sector," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 27(316), pages 09-31.
    2. Victor Claar, 2006. "Is the NAIRU more useful in forecasting inflation than the natural rate of unemployment?," Applied Economics, Taylor & Francis Journals, vol. 38(18), pages 2179-2189.
    3. Antonio Garofalo & Concetto Paolo Vinci, 2001. "Employment Oriented Policies In A Trade Union Local Wage Bargaining Model," Working Papers 7_2001, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.

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    Keywords

    Wages ; Productivity;

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