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Why is Wage Growth So Low?

Author

Listed:
  • Alexandra Rush

    (Reserve Bank of Australia)

  • David Jacobs

    (Reserve Bank of Australia)

Abstract

Wage growth has declined markedly in Australia over the past few years. At the same time, stronger growth in labour productivity has worked to contain growth in labour costs. These developments reflect several factors, including spare capacity in the labour market, a decline in inflation expectations, a lower terms of trade and the need for the real exchange rate to adjust to improve international competitiveness. The size of the decline in wage growth has been larger than simple historical relationships would suggest, which might be explained by various characteristics of the current episode.

Suggested Citation

  • Alexandra Rush & David Jacobs, 2015. "Why is Wage Growth So Low?," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 09-18, June.
    • Handle: RePEc:rba:rbabul:jun2015-02
    as

    Download full text from publisher

    File URL: https://www.rba.gov.au/publications/bulletin/2015/jun/pdf/bu-0615-2.pdf
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    References listed on IDEAS

    as
    1. Alexander Ballantyne & Daniel De Voss & David Jacobs, 2014. "Unemployment and Spare Capacity in the Labour Market," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 7-20, September.
    2. Michael Plumb & Christopher Kent & James Bishop, 2013. "Implications for the Australian Economy of Strong Growth in Asia," RBA Research Discussion Papers rdp2013-03, Reserve Bank of Australia.
    3. Jeff Fuhrer & Jane Sneddon Little & Yolanda K. Kodrzycki & Giovanni P. Olivei (ed.), 2009. "Understanding Inflation and the Implications for Monetary Policy: A Phillips Curve Retrospective," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262013630, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Guyonne Kalb & Jordy Meekes, 2021. "Wage Growth Distribution and Changes over Time: 2001–2018," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(1), pages 76-93, March.
    2. Christopher Kent, 2017. "Uncertainty and Monetary Policy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 50(1), pages 85-88, March.
    3. Courtney Brell & Christian Dustmann, 2019. "Immigration and Wage Growth: The Case of Australia," RBA Annual Conference Papers acp2019-05, Reserve Bank of Australia, revised Jul 2019.
    4. Guyonne Kalb & Jordy Meekes, 2019. "Wage Growth Distribution and Decline among Individuals: 2001-2017," RBA Annual Conference Papers acp2019-03, Reserve Bank of Australia, revised Jul 2019.
    5. Grzegorz Przekota & Andrzej Janowski & Anna Szczepanska-Przekota, 2023. "Causality in the Relationship between Economic Growth and Compensation," Sustainability, MDPI, vol. 15(23), pages 1-16, November.
    6. Christopher Lloyd & Tony Ramsay, 2017. "Resisting neo-liberalism, reclaiming democracy? 21st-century organised labour beyond Polanyi and Streeck," The Economic and Labour Relations Review, , vol. 28(1), pages 129-145, March.
    7. Joe Isaac, 2018. "Why Are Australian Wages Lagging and What Can Be Done About It?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(2), pages 175-190, June.
    8. Chew Lian Chua & Tim Robinson, 2018. "Why Has Australian Wages Growth Been So Low? A Phillips Curve Perspective," The Economic Record, The Economic Society of Australia, vol. 94(S1), pages 11-32, June.
    9. Geoff Weir, 2018. "Wage Growth Puzzles and Technology," RBA Research Discussion Papers rdp2018-10, Reserve Bank of Australia.

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