Why Have Real Wages Lagged Labour Productivity Growth in Canada?

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 article analy...

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Bibliographic Details
Published in:International productivity monitor 2008-09, Vol.17 (17), p.16-27
Main Authors: Harrison, Peter, Arsenault, Jean-Francois, Sharpe, Andrew
Format: Article
Language:English
Subjects:
canada
Cost and standard of living
Earnings
Gross domestic product
Growth
Industrial productivity
Inequalities
labour productivity
Labour Share
living standards
Productivity
Real Wages
Wages
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Summary: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 article 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.
ISSN:1492-9759
1492-9767