One graph is worth...

The graph below shows the relation between the percentage change in hourly wages across all sectors of the economy in local currency adjusted for inflation and real GDP growth between 2003 and 2011 (last year is obviously a forecast), using data from the Economic Intelligence Unit (EIU, access is restricted).

Even if one does not completely trust the data on real wage growth in China and India, or the relevance of real wages (considering the size of informal markets) in developing countries when compared to the developed countries closer to the axis like France, Germany, Japan and the US. But clearly one way out of the crisis is to redistribute income, and promote a healthier increase of real wages and domestic demand.


  1. And on a planet far, far away, Casey Mulligan is proposing cutting wages as a strategy to create employment and trim the deficit.


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