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What happens to growth when there is a global race to the bottom in wages?

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Policy Brief

09/10/2014

Call to Europe III, Conference Paper on wage-led growth in Europe

Özlem Onaran

The dramatic decline in the share of wages in GDP in both the developed and developing world during the neoliberal era of the post-1980s has accompanied lower growth rates at the global level as well as in many individual countries. Ignoring the lessons of the past, mainstream economics continue to guide policy towards further wage moderation along with austerity as one of the major responses to the Great Recession, in particular in Europe.

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