The Relationship between Labour Productivity and Real Wage Growth in Canada and OECD Countries

Andrew Sharpe, Jean-François Arsenault and Peter Harrison

No 2008-08, CSLS Research Reports from Centre for the Study of Living Standards

Abstract: The most direct mechanism by which labour productivity affects living standards is through real wages, that is, wages adjusted to reflect the cost of living. Between 1980 and 2005, the median real earnings of Canadians workers stagnated, while labour productivity rose 37 per cent. This report analyzes the reasons for this situation. It identifies four factors of roughly equal importance: rising earning inequalities; falling terms of trade for labour; a decrease in labour’s share of GDP; and measurement issues. This report also explores the relationship between labour productivity and real wages by province and by sector, as well as in the United States and in other high-income countries.

Keywords: wages; labour productivity; inequality; labour share; GDP; OECD; provinces; Canada; real wages; measurement (search for similar items in EconPapers)
Date: 2008-12
New Economics Papers: this item is included in nep-bec, nep-eff, nep-lab and nep-mac
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