Recent wage dynamics in advanced economics: Drivers and implications
Nominal wage growth in most advanced economies remains markedly lower than it was before the Great Recession of 2008–09. This chapter finds that the bulk of the wage slowdown can be explained by labor market slack, inflation expectations, and trend productivity growth. While involuntary part-time employment may have helped support labor force participation and facilitated stronger engagement with the workplace, it also appears to have weakened wage growth. This is the case even in economies where measured slack appears low.