Why is Wage Growth So Low?

Alexandra Rush and David Jacobs
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Alexandra Rush: Reserve Bank of Australia
David Jacobs: Reserve Bank of Australia

RBA Bulletin (Print copy discontinued), 2015, 09-18

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.

Keywords: wages; wage growth; real wages; wage price index; average earnings; unit labour costs; real exchange rate; Phillips curve; wage share; WPI; ULCs (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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