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2007, No. 7
Posted 2007-03-02

How Well Do Wages Follow Productivity Growth?

Over long periods of time, increases in “real” wages—that is, wages adjusted for changes in consumer prices—reflect increases in labor productivity. Economists now widely agree that labor productivity growth increased in the mid-1990s and remains at an elevated pace—at least relative to its anemic pace between 1973 and the mid-1990s.