Where Did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income—Dew-Becker 2005

Productivity growth drives real income per capita growth, according to economics. Our results raise doubts by linking macro productivity growth and income distribution. Only the top 10% of the income distribution enjoyed real wage and salary growth equal to or above the average rate of economy-wide productivity growth from 1966-2001 and 1997-2001. Median real wage and salary income barely grew while average wage and salary income kept pace with productivity growth because half the income gains went to the top 10%, leaving little for the bottom 90%. Half of this inequality effect is due to the 90th percentile's gains over the 10th percentile, and the other half to increased skewness within the top 10 percent.

Dew-Becker, I., & Gordon, R. (2005). Where did the productivity growth go? Inflation Dynamics and the distribution of income. https://doi.org/10.3386/w11842