The labor market, productivity, and wages
Principles of Economics // Fall 2025
marcio.santetti@emerson.edu
The productivity-pay gap
The productivity-pay gap
If one wishes to understand the current U.S. patterns of income distribution…
- Look at the job market!
That is where most typical families/individuals earn their income.
The productivity-pay gap
The productivity-pay gap
Let us study the divergence between productivity and wages through a policy perspective.
Timeline
Timeline
1930s: Post-Great Depression economy
How much unemployment?
New Deal
National Industrial Recovery Act (NIRA, 1933)
National Labor Relations Act (NLRA, 1935)
Taxes on top earners: 79%
End of Depression-era unemployment: World War II
Timeline
1940s: Post-WWII economy
How to pay for the war? The Revenue Act of 1942
National Labor-Management Conference (November 1945)
UAW and the “Big Three” (GM, Chrysler, and Ford): The Treaty of Detroit (1948 and 1950)
Timeline
1950s and 1960s: War economy (again), increasing female labor force participation
1970s: Deregulation and the beginning of the gap
