The Wage-Productivity gap revisited : is the labour share neutral to employment?
Karanassou, Marika
Sala Lorda, Hèctor (Universitat Autònoma de Barcelona. Departament d'Economia Aplicada)
Universitat Autònoma de Barcelona. Departament d'Economia Aplicada

Date:	2010
Description:	44 p.
Abstract:	This paper challenges the prevailing view of the neutrality of the labour income share to labour demand, and investigates its impact on the evolution of employment. Whilst maintaining the assumption of a unitary long-run elasticity of wages with respect to productivity, we demonstrate that productivity growth affects the labour share in the long run due to frictional growth (that is, the interplay of wage dynamics and productivity growth). In the light of this result, we consider a stylised labour demand equation and show that the labour share is a driving force of employment. We substantiate our analytical exposition by providing empirical models of wage setting and employment equations for France, Germany, Italy, Japan, Spain, the UK, and the US over the 1960-2008 period. Our findings show that the timevarying labour share of these countries has significantly influenced their employment trajectories across decades. This indicates that the evolution of the labour income share (or, equivalently, the wage-productivity gap) deserves the attention of policy makers.
Rights:	Aquest document està subjecte a una llicència d'ús de Creative Commons, amb la qual es permet copiar, distribuir i comunicar públicament l'obra sempre que se'n citin l'autor original, la universitat i el departament i no se'n faci cap ús comercial ni obra derivada, tal com queda estipulat en la llicència d'ús
Language:	Anglès
Series:	Departament d'Economia Aplicada. Documents de treball
Series:	Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia Aplicada) ; 1006
Document:	Working paper
Subject:	Treball ; Productivitat ; Salaris ; Ocupació

44 p, 485.7 KB

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Research literature > Working papers > Department of Applied Economics. Working papers