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The empirical case for a wage-led recovery policy for Europe

The empirical case for a wage-led recovery policy for Europe

Onaran, Özlem ORCID: 0000-0002-6345-9922 and Obst, Thomas (2015) The empirical case for a wage-led recovery policy for Europe. [Working Paper]

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Abstract

The Europe 2020 strategy of the European Commission (EC) as well as the national reform and stability programmes attribute a central role to wage moderation policies. Real wage growth below productivity growth and policies to deregulate the labour market in order to achieve this are recommended to increase the international competitiveness of the EU. However, the track record of these policies in the last three decades has been poor growth performance along with a declining share of wages in national income and rising inequality. Our results of a new project for the Foundation for European Progressive Studies (FEPS) show that the EC policy of wage moderation is counter-productive, and leads to a stagnation in growth, risk of deflation, and destabilizing growth models driven by debt or export surpluses in the absence of a healthy growth in wages.

Item Type: Working Paper
Uncontrolled Keywords: wage share; growth; Europe
Subjects: H Social Sciences > H Social Sciences (General)
Faculty / Department / Research Group: Faculty of Business > Greenwich Political Economy Research Centre (GPERC)
Related URLs:
Last Modified: 19 Nov 2015 15:19
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/14097

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