Divergence in Productivity and Implications for Inclusion

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Information about Divergence in Productivity and Implications for Inclusion

Published on July 12, 2016

Author: Structuralpolicyanalysis

Source: slideshare.net

1. Conference of the Global Forum on Productivity, 7 July 2016 Giuseppe Berlingieri, OECD Science, Technology and Innovation Directorate Cyrille Schwellnus, OECD Economics Department Divergence in Productivity and Implications for Inclusion

2. 100 110 120 130 140 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2 Source: Unweighted average of 25 OECD countries using OECD National Accounts Database; OECD Earnings Database. Decoupling of wages and productivity growth “Wage inequality” Labour share Productivity Real hourly average compensation Real hourly median compensation

3. Heterogeneity in decoupling across countries 3Source: OECD estimates using OECD National Accounts Database; OECD Earnings Database. Annual growth differential between real median compensation and labour productivity, 1995-2013 Percentage points -1.5 -1.0 -0.5 0.0 0.5 1.0 KOR POL HUN USA AUS NOR JPN CAN ISR AUT DEU NLD CHL SVK ESP NZL GBR DNK ITA FRA FIN BEL SWE CZE Contribution of wage inequality Contribution of labour share Total decoupling

4. Has the labour share stabilised? 4 Evolution of the labour share, OECD average Source: Unweighted average of 14 OECD countries using OECD National Accounts database % 70 72 74 76 78 80 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Trend, 1983-2005

5. 100 110 120 130 140 150 160 1995 1997 1999 2001 2003 2005 2007 2009 2011 Average (based on surveys) 50 percentile (based on surveys) 5 Note: unweighted average of 9 OECD countries. Source: OECD estimates using OECD National Accounts Database; OECD Earnings Database; Alvaredo, Atkinson, Piketty, Saez, and Zucman, The World Wealth and Income Database. Real hourly wages (Index1995=100) Is the increase in wage inequality under-estimated? Wage inequality

6. 100 110 120 130 140 150 160 1995 1997 1999 2001 2003 2005 2007 2009 2011 1 percent (based on tax records) Average (based on surveys) 50 percentile (based on surveys) 6 Note: unweighted average of 9 OECD countries. Source: OECD estimates using OECD National Accounts Database; OECD Earnings Database; Alvaredo, Atkinson, Piketty, Saez, and Zucman, The World Wealth and Income Database. Real hourly wages (Index1995=100) Is the increase in wage inequality under-estimated? Wage inequality

7. 100 110 120 130 140 150 160 1995 1997 1999 2001 2003 2005 2007 2009 2011 1 percent (based on tax records) Average (based on surveys) 50 percentile (based on surveys) 90 percentile (based on surveys) 7 Note: unweighted average of 9 OECD countries. Source: OECD estimates using OECD National Accounts Database; OECD Earnings Database; Alvaredo, Atkinson, Piketty, Saez, and Zucman, The World Wealth and Income Database. Real hourly wages (Index1995=100) Is the increase in wage inequality under-estimated? Wage inequality

8. 1 1.2 1.4 1.6 1.8 2 2.2 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 FRA OECD DEU BEL AUT FIN SWE SVN POL GRC NLD LUX IRL ESP GBRITA PRT HUN DNK TURJPN KOR Is there a link between wage and productivity dispersion? 8Source: OECD Economic Outlook (May 2016) based on ORBIS. P90/P50 ratio in the firm distribution of average labour income P90/P50 ratio in the firm distribution of labour productivity 2013

9. Motivation: increase in wage inequality Note: The figure plots the year fixed-effects of a regression of log-wage dispersion (p90-p10 ratio) within country-sector pairs. Data: MultiProd. Average Trend in between-firm wage dispersion (p90-p10)

10. Motivation: increase in productivity dispersion Note: The figure plots the year fixed-effects of a regression of log-productivity dispersion (p90-p10 ratio) within country-sector. Data: MultiProd. Differences across countries: • magnitude • components (bottom vs top) Average Trend in Productivity Dispersion (p90-p10)

11. Motivation: increase in technology dispersion vs misallocation? Note: The figure plots the year fixed-effects of a regression of MFP_Q and MFP_R dispersion (p90-p10) within country-sector. Data: MultiProd. Average Trend in MFP_Q and MFP_R Dispersion (p90-p10)

12.  Are these trends intertwined?  Is increasing earnings inequality linked to growing productivity dispersion among firms?  The objective: build a picture across countries and over time of  Wage dispersion  Productivity dispersion  The link between the two  Role of Policy?  The task requires data representative for the entire distribution of firms: MultiProd project, 16 countries so far and more to come. The Questions

13. -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 2002 2004 2006 2008 2010 2012 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 2002 2004 2006 2008 2010 2012 -1 000 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 2002 2004 2006 2008 2010 2012 -3 000 -2 000 -1 000 0 1 000 2 000 3 000 4 000 5 000 2002 2004 2006 2008 2010 2012 Bottom decile 4th-6th decile Top decile Manufacturing Services Average Labour Productivity by Decile (Log Change) Manufacturing Services Average Wage by Labour Productivity Decile (Absolute Change - $2005) Example of divergence(s): Sweden

14.  Dispersion Wages Dispersion Productivity  Link between the two:  Stronger in manufacturing than services  Increasing over time for LP, fairly constant for MFP Thought-provoking initial evidence Variable Wage Dispersion Prod Dispersion Link Openness, Import, Export --- --- +++ Share of ICT in Gross Fixed Assets +++ Hours of High- Skilled (share) +++ +++ R&D expenditures +++ Real Min Wage --- --- --- EPL --- --- Trade Union --- -- --- Gov. Intervention in Wage Bargaining -- --- ++ FactorsPolicies +++

15. THANK YOU All comments and questions are welcome MultiProd@oecd.org

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