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The Relationship between Labour Productivity and Real Wage Growth in Canada and OECD Countries

Author

Listed:
  • 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.

Suggested Citation

  • Andrew Sharpe & Jean-François Arsenault & Peter Harrison, 2008. "The Relationship between Labour Productivity and Real Wage Growth in Canada and OECD Countries," CSLS Research Reports 2008-08, Centre for the Study of Living Standards.
    • Handle: RePEc:sls:resrep:0808
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    Citations

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    Cited by:

    1. Alina Stundziene & Asta Baliute, 2022. "Personnel Costs and Labour Productivity: The Case of European Manufacturing Industry," Economies, MDPI, vol. 10(2), pages 1-17, January.
    2. Mohammad Zulfan Tadjoeddin, 2016. "Productivity, wages and employment: evidence from the Indonesia's manufacturing sector," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 21(4), pages 489-512, October.
    3. Jakub Growiec, 2009. "Determinants of the Labor Share: Evidence from a Panel of Firms," NBP Working Papers 69, Narodowy Bank Polski.
    4. Jacques Rouillard & Jean-François Rouillard, 2018. "Perspective historique sur l’évolution des salaires réels au Québec (1940-2016)," Cahiers de recherche 18-04, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    5. 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.
    6. Anna Sabadash, 2013. "ICT-induced Technological Progress and Employment: A Literature Review," JRC Working Papers on Digital Economy 2013-07, Joint Research Centre.
    7. Anna Sabadash, 2013. "ICT-induced Technological Progress and Employment: a Happy Marriage or a Dangerous Liaison? A Literature Review," JRC Research Reports JRC76143, Joint Research Centre.
    8. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.
    9. Lawrence Mishel & Josh Bivens, 2021. "The Productivity-Median Compensation Gap in the United States: The Contribution of Increased Wage Inequality and the Role of Policy Choices," International Productivity Monitor, Centre for the Study of Living Standards, vol. 41, pages 61-97, Fall.
    10. John R. Moser, 2020. "Minimum Wage, Labor Equilibrium, and the Productivity Horizon: A Visual Examination," Papers 2010.14669, arXiv.org, revised Dec 2020.
    11. 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.
    12. 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.
    13. Parui, Pintu, 2015. "Government Expenditure and Economic Growth: A Demand-side Analysis," MPRA Paper 66855, University Library of Munich, Germany, revised 30 Dec 2019.

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