Correlation between labour share and value-added imports from China Correlation between labour share and RD expenditures
1. GENERAL ASSESSMENT OF THE MACROECONOMIC SITUATION
OECD ECONOMIC OUTLOOK, VOLUME 2017 ISSUE 1 © OECD 2017 – PRELIMINARY VERSION
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that real wage growth might remain subdued even with continued improvements in national labour markets unless there are significant non-linear effects of slack on wage
growth after labour markets tighten beyond a certain point Nalewaik, 2016.
Factors that may have reduced the responsiveness of wages to labour market slack include weaker bargaining power of workers due to rapid technological change, the
automation of certain tasks, increasing global production integration and, in particular, the offshoring of low-skill labour intensive tasks Figure 1.15. These factors are interrelated
and difficult to untangle fully, since stronger trade integration directly affects productivity growth and incentives to innovate Chapter 2; Bloom et al., 2016; Égert and Gal, 2017.
Firm-level evidence suggests that both globalisation and digitalisation are associated with higher wage divergence Berlingieri et al., 2017.
Overall, wage pressures should eventually show up as labour markets continue to tighten. However, nominal and real wage growth in the advanced economies are projected
to increase only gently in 2017-18 Figure 1.12, and remain well below pre-crisis norms. Productivity growth is subdued, labour market slack is more extensive than suggested by
conventional unemployment rates and the influence of a given level of slack on real wage growth is weaker than prior to the crisis. Hence, additional policy support for demand and
long-term supply is needed to eliminate fully existing labour market slack and strengthen productivity growth, thereby bringing about the durable strengthening of real wages
needed to sustain consumption growth.
Headline inflation has risen but underlying inflationary pressures are projected to remain subdued
Higher commodity prices have boosted headline inflation in the major economies, but core inflation remains modest Figure 1.16. Commodity prices including energy, metals
and non-agricultural food commodities have risen since 2016Q3, reflecting both stronger demand and idiosyncratic supply constraints. Oil prices have increased since November,
Figure 1.15. Changes in trade and technology are both associated with changes in labour shares in advanced economies
Change between 1995 and 2011, in percentage points
Source: Schwellnus et al. 2017, “The Role of Trade, Technology and Public Policies in Determining the Labour Share: Empirical Evidence”, OECD Economics Department Working Papers, forthcoming, OECD Publishing, Paris.
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