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Is the Great Decoupling Real?
  • Marinko Skare,
  • damian.skare
Marinko Skare
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damian.skare
School of Economics Pula
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Abstract

Abstract

The great decoupling is real. Productivity and employment/wages link changed after 1980 in many countries, not just U.S.  This study investigates the productivity and employment/wages link (1950-2014) looking for empirical prove of the "great decoupling" put forward by \cite{brynjolfsson_great_2013}. The results should stimulate policymakers to openly question why real wages and productivity don't line up with the theory. We use <a href= to isolate trends in real wages, labor share in GDP and labor productivity and rolling correlation to explore if the great decoupling. We found that the great decoupling (divergence between real wages/employment and productivity is present in all countries (10 in the sample). The dynamics of the great decoupling is however different between the countries altough year 1980 seems to be a dominant breaking point for the start of the phenomena. This paper provide multicountry empirical prove of the presence of the great decoupling phenomena and explore its dynamics over 1950-2014. Policy makers but also firms and unions should take the existence of this phenomena seriously since it can have serious consequences on economic growth and labor markets functioning.