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Wage Growth after the Great Recession

Author

Listed:
  • Pinheiro, Roberto

    (Federal Reserve Bank of Cleveland)

  • Yang, Meifeng

    (Federal Reserve Bank of Cleveland)

Abstract

Nominal wage growth since the Great Recession has been sluggish. We show that the sluggishness is due mostly to weak growth in labor productivity, as well as lower-than-expected inflation. We also find that wage growth since late 2014 has actually been above what would be consistent with realized labor-productivity growth and inflation, and this trend in wages reflects an increase in labor’s share of income. We show evidence that this increase in the labor share may be due to a reversal of the trend to replace labor with capital.

Suggested Citation

  • Pinheiro, Roberto & Yang, Meifeng, 2017. "Wage Growth after the Great Recession," Economic Commentary, Federal Reserve Bank of Cleveland, issue March.
  • Handle: RePEc:fip:fedcec:00065
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    File URL: https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/2017-economic-commentaries/ec-201704-wage-growth-after-great-recession.aspx
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    Keywords

    Wage growth; Labor; Productivity;

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