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Wages and Productivity: Structural Changes are Crucial to Understand

In: Economics Gone Astray

Author

Listed:
  • Natalie Denby
  • Blu Putnam

Abstract

Despite a tight labor market, wage and productivity growth remained low in the US in the post-Great Recession decade. Nominal hourly average wages rose by 2.6% in the US between 2016 and 2017, on par with post-Recession performance. Labor productivity growth averaged only 1.1% between 2007 and 2016. Between 1995 and 2007, by contrast, the average growth rate was 2.5%. Although cyclical factors may be partially to blame, there are several key structural features of the US economy contributing to diminished growth. Wage and productivity growth have been held back by persistently low inflation expectations, workforce demographics, and the shift in the payrolls distribution in the economy in favor of lower-wage sectors…

Suggested Citation

  • Natalie Denby & Blu Putnam, 2019. "Wages and Productivity: Structural Changes are Crucial to Understand," World Scientific Book Chapters, in: Economics Gone Astray, chapter 6, pages 69-79, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9781944659592_0006
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    More about this item

    Keywords

    Economics; Macroeconomics; Monetary Policy; Fiscal Policy; Inflation; Risk Management; Federal Reserve; Quantitative Easing; Taylor Rule;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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