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I don't understand that paper.

Firstly, are they using median or average wages? Insane bubbly compensation in finance will distort both. So it's more useful to compare wage growth by sector, splitting off the financialised economy from the rest.

Secondly, there seems to be some confusion about whether wage growth is a good thing or a bad one.

Which leads to an interesting question - if growth and producvitity are good but wage growth is bad, where does the money go?

Finally, isn't 'wage growth' really just harmonisation, and exactly what you'd expect in a common trading area? Considering that the periphery was always less marginally dynamic than the core, I don't see why wage growth would be considered a problem.

I suppose the implication is that wage increases aren't really affordable - but then you'd expect the ECB to say that for ideological reasons.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu May 6th, 2010 at 10:39:13 AM EST
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