Race to the Bottom: Low Productivity, Market Power, and Lagging Wages

23 Pages Posted: 16 Oct 2018

See all articles by Lance Taylor

Lance Taylor

The New School - Bernard Schwartz Center for Economic Policy Analysis (CEPA)

Ozlem Omer

New School for Social Research

Date Written: August 8, 2018

Abstract

“Dualism” in the structure of production across sectors of the US economy, employment by sector, productivity levels and growth, real wages, and intersectoral terms-of trade increased markedly between1990 and 2016. The discussion focuses on 16 sectors. Seven were “stagnant” - - construction, education and health, other services, entertainment, accommodation and food, business services, and transportation and warehousing. They had low productivity levels, productivity growth rates hovering around zero, and low real wages. Their share of total employment rose from 47% in 1990 to 61% in 2016. The other “dynamic” sectors had higher and positively growing productivity while the terms-of- trade shifted against them. This bifurcation between industries is discussed in terms of a simple model. Increasing duality and secular stagnation are distinct possibilities.

Keywords: economic dualism, industrial structure, productivity, low wages, employment

JEL Classification: D31, D33,E2, E12, E24, J40, L11

Suggested Citation

Taylor, Lance and Omer, Ozlem, Race to the Bottom: Low Productivity, Market Power, and Lagging Wages (August 8, 2018). Institute for New Economic Thinking Working Paper Series No. 80. Available at SSRN: https://ssrn.com/abstract=3258219 or http://dx.doi.org/10.2139/ssrn.3258219

Lance Taylor (Contact Author)

The New School - Bernard Schwartz Center for Economic Policy Analysis (CEPA) ( email )

80 Fifth Ave.
5th Floor
New York, NY 10027
United States

Ozlem Omer

New School for Social Research ( email )

6 East 16th Street
New York, NY 10003
United States

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