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Productivity and wages?

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Productivity and wages?

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budmad posted on Sun, Mar 14 2010 12:06 AM

I came across a couple of articles in the New York Times and other sources that showed a disconection between raises in productivity and wages.

e.g.:

 

In THIS article they argue  that wages and productivity correlation are based on union's pressure and has nothing to do with markets.

Austrian theory states that an increase of the capital available, productivity increases and also wages (or at least you can buy more goods with the same amount of money).

How can you explain this after watching the graph?

 

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Jonathan M. F. Catalán replied on Sun, Mar 14 2010 12:10 AM

How are those wages being measured?  There is a difference between real wages and nominal wages.  Even if you make eight dollars an hour before and after there is a doubling in productivity, those eight dollars are now worth twice as much.

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