Wage Stagnation and Productivity: Challenging the Conventional Analysis By Claudia Fontanari and Antonella Palumbo Jul 7, 2022 Stagnating real wages may have contributed to the slowdown of US productivity
The prevailing idea in the literature, it results, is that a combination of market mechanisms and exogenous shocks have made labor (and especially poorly qualified labor) superabundant with respect to other factors and the economy's requirements. Implicit or explicit, the message of the analyses that see the change in distribution as essentially the outcome of market forces is that there is little that policies can do, apart from somehow palliating the worst social consequences of the technological or commercial shocks.
Generally, however, these analyses fail to give an account entirely consistent with the data.
The problem of wages and work conditions is now crucial. Higher wages and safer and better jobs would not only re-orient firms towards higher productivity and more efficient organization. They would possibly also represent a serious incentive towards enhanced labor supply, thus easing one of the constraints currently concurring to inflation. The lasting wounds that the regime of low wages inflicts on the economy, in addition to what it entails for the greatest part of society, should be a matter of serious concern.
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