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

By Gee Hee Hong, Zsoka Koczan, Weicheng Lian, Malhar S Nabar

March 9, 2018

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Gee Hee Hong, Zsoka Koczan, Weicheng Lian, and Malhar S Nabar. More Slack than Meets the Eye? Recent Wage Dynamics in Advanced Economies, (USA: International Monetary Fund, 2018) accessed September 18, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Nominal wage growth in most advanced economies remains markedly lower than it was before the Great Recession of 2008–09. This paper finds that the bulk of the wage slowdown is accounted for by labor market slack, inflation expectations, and trend productivity growth. In particular, 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.

Subject: 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

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/050
Stock No:

WPIEA2018050
ISBN:

9781484345351
ISSN:

1018-5941

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