Productivity rose in third quarter, wages not so much
Matthew Martin 12/16/2013 02:41:00 PM
This is mostly a note for myself, but I got this in my inbox today, what it says is that worker productivity is rising faster than wages right now, a phenomenon that has been generally true since the recession began. In theory, in competitive markets wages should equal the marginal productivity of workers. An important distinction, however, is that these headline statistics measure average productivity, which is different. Rising average productivity certainly implies a rising marginal product, but I don't think that can explain this discrepancy: the marginal variable must rise (and fall) faster than the average, so the headline above actually understates things.