Why Have Real Wages Lagged Labour Productivity Growth in Canada?
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 article 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.
Volume (Year): 17 (2008)
Issue (Month): (Fall)
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- Andrew Sharpe & Jean-François Arsenault & Peter Harrison, 2008. "The Relationship between Productivity and Real Wage Growth in Canada and OECD Countries, 1961-2006," CSLS Research Reports 2008-08, Centre for the Study of Living Standards.
- Paul Conway & Véronique Janod & Giuseppe Nicoletti, 2005. "Product Market Regulation in OECD Countries: 1998 to 2003," OECD Economics Department Working Papers 419, OECD Publishing.
- Jean-Francois Arsenault & Andrew Sharpe, 2008. "An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 16, pages 14-39, Spring.
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