## More Slack than Meets the Eye? Recent Wage Dynamics in Advanced Economies

_IMF Working Papers, March 9, 2018_

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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

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### 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.*

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_Source: https://www.imf.org/en/publications/wp/issues/2018/03/09/more-slack-than-meets-the-eye-recent-wage-dynamics-in-advanced-economies-45692_