
handle: 10419/52418
In the United States, labor’s share of income falls after a positive disturbance to productivity growth or inflation, and it remains low for some time. Previous researchers have argued that the negative relationship between productivity growth and labor’s share is puzzling. I argue otherwise. A search and matching model with infrequently bargained nominal wages would predict the observed behavior of labor’s share after a productivity disturbance, and it also predicts the observed behavior of labor’s share after an inflationary disturbance. Wages at the macroeconomic level seem to be sticky in a way which is consistent with microeconomic evidence; much of the ongoing discussion about the real effects of sticky wages seems to be well-motivated, while sticky price models fail to match the data.
sticky wages, productivity, ddc:330, J23, labor share, Sticky wages, sticky prices, staggered Nash bargaining, inflation, productivity, search and matching, labor’s share, sticky prices, staggered Nash bargaining, search and matching, E24, E25, J31, inflation, jel: jel:E25, jel: jel:J31, jel: jel:E24, jel: jel:J23
sticky wages, productivity, ddc:330, J23, labor share, Sticky wages, sticky prices, staggered Nash bargaining, inflation, productivity, search and matching, labor’s share, sticky prices, staggered Nash bargaining, search and matching, E24, E25, J31, inflation, jel: jel:E25, jel: jel:J31, jel: jel:E24, jel: jel:J23
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