OECD Economics Department Working Papers
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
The "Puzzle" of Wage Moderation in the 1980s
In the 1980s, real consumption wages fell relative to labour efficiency in OECD countries, although there has been some pressure on wages recently. The persistent moderation of wages was due to labour-market slack, as well as rising non-wage labour costs and slower increases in output prices relative to consumer prices in some countries. It does not appear to reflect changes in wage behaviour. The analysis of time-series properties suggests that, typically, wages do not fully catch up to past losses. There is, furthermore, no strong evidence for instability of well-specified wage equations with the exception of France where stringent monetary policy since 1983 may have modified the formation of expectations ...
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