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Globalization and Wage Stagnation: Historical and Theoretical Perspectives

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  • Kenneth Weiher
  • Hamid Beladi

Abstract

U.S. real-wages stagnation since 1973 in spite of rising labor productivity is an unprecedented phenomenon. This paper presents the history of the relationship between real wages and productivity and based upon long-run evidence rejects two possible explanations, measurement issues and skill-biased technical change. Instead it focuses on the coincidence of the development of productivity/wage wedge and the conversion of the U.S. economy to an open one in the 1970s. It suggests that in an open economy, technical improvements and foreign competition may collaborate to generate a fall in real earnings, where they would not in a closed economy.

Suggested Citation

  • Kenneth Weiher & Hamid Beladi, 2011. "Globalization and Wage Stagnation: Historical and Theoretical Perspectives," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 18(2), pages 201-211.
    • Handle: RePEc:taf:raaexx:v:18:y:2011:i:2:p:201-211
    DOI: 10.1080/16081625.2011.9720881
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    References listed on IDEAS

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    1. Clarence D. Long, 1960. "Introduction to "Wages and Earnings in the United States, 1860-1890"," NBER Chapters, in: Wages and Earnings in the United States, 1860-1890, pages 1-12, National Bureau of Economic Research, Inc.
    2. Clarence D. Long, 1960. "Wages and Earnings in the United States, 1860-1890," NBER Books, National Bureau of Economic Research, Inc, number long60-1.
    3. Paul Gomme & Peter Rupert, 2004. "Measuring labors share of income," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Nov.
    4. Ms. Anastasia Guscina, 2006. "Effects of Globalization on Labor’s Share in National Income," IMF Working Papers 2006/294, International Monetary Fund.
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    Cited by:

    1. Semat Joshua & Linn Suzanna & Lowery David & Berry William D., 2015. "The cost growth of government revisited," Business and Politics, De Gruyter, vol. 17(4), pages 723-737, December.

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