IDEAS home Printed from https://ideas.repec.org/a/rba/rbabul/jun2015-02.html
   My bibliography  Save this article

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
    Download Restriction: no
    ---><---

    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

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. Geoff Weir, 2018. "Wage Growth Puzzles and Technology," RBA Research Discussion Papers rdp2018-10, Reserve Bank of Australia.
    9. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sergio Destefanis & Matteo Fragetta & Giuseppe Mastromatteo & Nazzareno Ruggiero, 2020. "The Beveridge curve in the OECD before and after the great recession," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(3), pages 411-436, September.
    2. Peter Tulip, 2014. "The Effect of the Mining Boom on the Australian Economy," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 17-22, December.
    3. Adriana Cornea‐Madeira & João Madeira, 2022. "Econometric Analysis of Switching Expectations in UK Inflation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(3), pages 651-673, June.
    4. Daniel Rees, 2013. "Terms of Trade Shocks and Incomplete Information," RBA Research Discussion Papers rdp2013-09, Reserve Bank of Australia.
    5. Laurence Ball & Nicolás Roux & Marc Hofstetter, 2013. "Unemployment in Latin America and the Caribbean," Open Economies Review, Springer, vol. 24(3), pages 397-424, July.
    6. Unn Lindholm & Marcus Mossfeldt & Pär Stockhammar, 2020. "Forecasting inflation in Sweden," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(1), pages 39-68, April.
    7. Adam Gorajek & Daniel Rees, 2015. "Lower Bulk Commodity Prices and Their Effect on Economic Activity," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 31-38, September.
    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. Malikane, Christopher, 2012. "The Microfoundations of the Keynesian Wage-Price Spiral," MPRA Paper 42923, University Library of Munich, Germany, revised 2012.
    10. Mardi Dungey & Renee Fry-McKibbin & Verity Linehan, 2014. "Chinese resource demand and the natural resource supplier," Applied Economics, Taylor & Francis Journals, vol. 46(2), pages 167-178, January.
    11. Malikane, Christopher, 2014. "A new Keynesian triangle Phillips curve," Economic Modelling, Elsevier, vol. 43(C), pages 247-255.
    12. Bańbura, Marta & Bobeica, Elena, 2023. "Does the Phillips curve help to forecast euro area inflation?," International Journal of Forecasting, Elsevier, vol. 39(1), pages 364-390.
    13. Laurence Ball, 2014. "Long-term damage from the Great Recession in OECD countries," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(2), pages 149-160, September.
    14. Boateng, Ebenezer & Asafo-Adjei, Emmanuel & Addison, Alex & Quaicoe, Serebour & Yusuf, Mawusi Ayisat & Abeka, Mac Junior & Adam, Anokye M., 2022. "Interconnectedness among commodities, the real sector of Ghana and external shocks," Resources Policy, Elsevier, vol. 75(C).
    15. Andrea Vaona, 2015. "Anomalous empirical evidence on money long-run super-neutrality and the vertical long-run Phillips curve," Working Papers 17/2015, University of Verona, Department of Economics.
    16. Zivile Zekaite & Gabe de Bondt & Elke Hahn, 2017. "Alice: A New Inflation Monitoring Tool," EcoMod2017 10414, EcoMod.
    17. Tim Robinson, 2013. "Estimating and Identifying Empirical BVAR-DSGE Models for Small Open Economies," RBA Research Discussion Papers rdp2013-06, Reserve Bank of Australia.
    18. Vanessa Rayner & James Bishop, 2013. "Industry Dimensions of the Resource Boom: An Input-Output Analysis," RBA Research Discussion Papers rdp2013-02, Reserve Bank of Australia.
    19. Knop, Stephen J. & Vespignani, Joaquin L., 2014. "The sectorial impact of commodity price shocks in Australia," Economic Modelling, Elsevier, vol. 42(C), pages 257-271.
    20. Kathryn Davis & Martin McCarthy & Jonathan Bridges, 2016. "The Labour Market during and after the Terms of Trade Boom," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 1-10, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rba:rbabul:jun2015-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Paula Drew (email available below). General contact details of provider: https://edirc.repec.org/data/rbagvau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.