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Progressive policies for wage-led growth in Europe

Author

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  • Onaran, Özlem
  • Stockhammer, Engelbert

Abstract

Results of two new projects for FEPS and TASC by Onaran and Obst (2015) and Stockhammer and Wildauer (2015) show that the decline in the wage share was associated with a weaker and more volatile growth performance in the EU as a whole as well as in the vast majority of countries including the UK and Germany; this is what we call a wage-led demand regime. Stimulating wages in the EU would not only improve economic performance but would also help tackle unsustainable growth that is either driven by debt or by an excessive reliance on exports. While a higher wage policy can be implemented in a large single country with a large domestic market such as the UK or Germany, the impact would be stronger if coordinated at the European level. This finding has significant policy implications ahead of the EU referendum in the UK: the UK should see the EU membership as an opportunity and lead high road labour market policies in the EU as opposed to its current position of promoting low road policies, and use every chance to improve the cooperation among the pro-labour forces.

Suggested Citation

  • Onaran, Özlem & Stockhammer, Engelbert, 2016. "Progressive policies for wage-led growth in Europe," Greenwich Papers in Political Economy 15527, University of Greenwich, Greenwich Political Economy Research Centre.
    • Handle: RePEc:gpe:wpaper:15527
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    File URL: http://gala.gre.ac.uk/id/eprint/15527/1/GpercPolicyBrief_UOG_FEPS%20onaran%20stockhammer.pdf
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    References listed on IDEAS

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    Cited by:

    1. Kapeller, Jakob & Gräbner, Claudius & Heimberger, Philipp, 2019. "Economic polarisation in Europe: Causes and policy options," ifso working paper series 5, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    2. Özlem Onaran, 2016. "Secular stagnation and progressive economic policy alternatives," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 13(2), pages 229-240, September.
    3. Schilirò, Daniele, 2017. "Imbalances and policies in the Eurozone," MPRA Paper 82847, University Library of Munich, Germany.

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    More about this item

    Keywords

    Wage share; growth; Europe; UK referendum;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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