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Low Wage Growth: Why It Matters and How to Fix It

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  • Stephen Bell
  • Michael Keating

Abstract

Neoclassical economic theory and its supply‐side account of the drivers of economic growth has been influential amongst Australian economic policymakers and advisors. In the post‐Keynesian tradition, we argue instead that aggregate demand drives economic growth, even in the medium term. In particular, the investment and innovation that depends upon that investment are mainly determined by the investment response to consumer demand. Currently, weak wages growth in Australia is weakening that consumer demand. The paper examines the causes of weak wages growth and offers solutions.

Suggested Citation

  • Stephen Bell & Michael Keating, 2019. "Low Wage Growth: Why It Matters and How to Fix It," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 52(4), pages 377-392, December.
    • Handle: RePEc:bla:ausecr:v:52:y:2019:i:4:p:377-392
    DOI: 10.1111/1467-8462.12343
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    References listed on IDEAS

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    1. James Bishop & Iris Chan, 2019. "Is Declining Union Membership Contributing to Low Wages Growth?," RBA Annual Conference Papers acp2019-06, Reserve Bank of Australia.
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    Cited by:

    1. Dayana Jimenez & Isabel B. Franco & Tahlia Smith, 2021. "A Review of Corporate Purpose: An Approach to Actioning the Sustainable Development Goals (SDGs)," Sustainability, MDPI, vol. 13(7), pages 1-21, April.

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