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CentrePiece article

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


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.


Joao Paulo Pessoa and John Van Reenen

10 December 2013     Paper Number CEPCP401

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This CentrePiece article is published under the centre's Growth programme.