OECD Economics Department Working Papers

ISSN: 
1815-1973 (online)
http://dx.doi.org/10.1787/18151973
Hide / Show Abstract
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

 

Decoupling of wages from productivity

Macro-level facts You or your institution have access to this content

English
Click to Access: 
    http://oecd.metastore.ingenta.com/content/d4764493-en.pdf
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/decoupling-of-wages-from-productivity_d4764493-en
  • READ
Author(s):
Cyrille Schwellnus1, Andreas Kappeler2, Pierre-Alain Pionnier1
Author Affiliations
  • 1: OECD, France

  • 2: European Investment Bank, Luxembourg

31 Jan 2017
Bibliographic information
No.:
1373
Pages:
27
http://dx.doi.org/10.1787/d4764493-en

Hide / Show Abstract

Over the past two decades, aggregate labour productivity growth in most OECD countries has decoupled from real median compensation growth, implying that raising productivity is no longer sufficient to raise real wages for the typical worker. This paper provides a quantitative description of decoupling in OECD countries over the past two decades, with the results suggesting that it is explained by declines in both labour shares and the ratio of median to average wages (a partial measure of wage inequality). Labour shares have declined in about two thirds of the OECD countries covered by the analysis. However, the contribution of labour shares to decoupling is smaller if sectors are excluded for which labour shares are driven by changes in commodity and asset prices or for which labour shares are driven by imputation choices (primary, housing and non-market sectors). The ratio of median to average wages has declined in all but two of the OECD countries covered by the analysis and appears to reflect disproportionate wage growth at the very top of the wage distribution rather than stagnating median wages. The causes for these developments will be analysed in follow-up research.
Keywords:
productivity, labour share, wage inequality
JEL Classification:
  • D3: Microeconomics / Distribution
  • E24: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity
  • E25: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Aggregate Factor Income Distribution
 
Visit the OECD web site