More Slack than Meets the Eye? Recent Wage Dynamics in Advanced Economies
IMF Working Papers, March 9, 2018
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- More Slack than Meets the Eye? Recent Wage Dynamics in Advanced Economies
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Bibliographic details
- Authors: Gee Hee Hong, Zsoka Koczan, Weicheng Lian, Malhar S Nabar
- Published: March 9, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484345351.001
Key findings
- Nominal wage growth in most advanced economies remains markedly lower than it was before the Great Recession of 2008–09.
- The bulk of the wage slowdown is accounted for by labor market slack, inflation expectations, and trend productivity growth.
- There appears to be greater slack than meets the eye.
- Involuntary part-time employment appears to have weakened wage growth even in economies where headline unemployment rates are now at, or below, their averages in the years leading up to the recession.
Analysis and drivers
- Labor market slack:
- Hidden slack (for example, involuntary part-time employment) helps explain lower-than-expected wage growth despite low headline unemployment rates in some economies.
- Inflation expectations:
- Lower inflation expectations are identified as a contributing factor to subdued nominal wage growth.
- Trend productivity growth:
- Slower trend productivity growth is also a material component of the wage slowdown.
Scope and metadata
- Authors: Gee Hee Hong, Zsoka Koczan, Weicheng Lian, Malhar S Nabar
- Date: March 9, 2018
- Series: Working Paper No. 2018/050
- Issue: 050
- Pages: 44
- DOI: https://doi.org/10.5089/9781484345351.001
- Stock No: WPIEA2018050
- ISBN: 9781484345351
- ISSN: 1018-5941
- Subjects: Employment, Labor, Labor markets, Production, Productivity, Unemployment rate, Wages
- Keywords: aggregate output, Baltics, Employment, employment share, financial crisis, Global, involuntary part-time employment, Labor markets, output gap, part-time employment, Phillips curve specification, Productivity, productivity growth, temporary contract, unemployment, Unemployment rate, wage dynamics, wage growth, Wages, WP
Research context and usage
- This document is an IMF Working Paper intended to describe research in progress, elicit comments, and encourage debate.
- The views expressed are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
IMF Working Paper — "More Slack than Meets the Eye? Recent Wage Dynamics in Advanced Economies", March 9, 2018, Working Paper No. 2018/050.
Content in this bundle
- More Slack than Meets the Eye? Recent Wage Dynamics in Advanced Economies, WP/18/50, March 2018