Wage growth and productivity growth: the myth and reality of 'decoupling'

João Paulo Pessoa and John van Reenen

CentrePiece - The magazine for economic performance from Centre for Economic Performance, LSE

Abstract: Employees in the UK are not being denied their fair share of economic growth, according to research by João Paulo Pessoa and John Van Reenen. Their investigation of claims that wage growth has become 'decoupled' from productivity growth finds that decoupling has been overstated and cannot be used to justify redressing the balance between wages and profits. They show that the share of UK income going to labour is basically the same now as it was 40 years ago. The real problem is inequality among employees: wage inequality has risen massively since the late 1970s. Improving skills in the bottom half of the education distribution will boost productivity and real wages.

Keywords: Decoupling; Wages; Productivity; Compensation; Labour Income Share (search for similar items in EconPapers)
JEL-codes: E24 J20 J30 (search for similar items in EconPapers)
Date: 2013-12
New Economics Papers: this item is included in nep-eff, nep-lma and nep-mac
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Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepcnp:401

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