The decoupling between labour compensation and productivity in high?income countries: Why is the nexus broken?

During the last decades, mature economies have tended to experience a divergence between labour compensation and productivity growth. Interpretations of this trend are still under debate. Our article aims at contributing sound, evidence-based understanding. We estimate magnitude decoupling for panel 22 high-income (1970–2018) empirically assess role variety factors. After providing evidence that casts doubt on impact technical change, we adopt ‘political economy’ standpoint focus structural effects real growth several macroeconomic institutional dimensions. findings indicate market slack weakening pro-labour institutions acted as important wage-squeezing A negative effect is also found trade openness international capital mobility, while most financialization variables not significant. The robustness our results supported by range tests specifications.