Should-Read: Anna Stansbury and Lawrence Summers: On the link between US pay and productivity

Should-Read: A good paper. But I am inclined to say “not yet” rather than “no”. The type of productivity growth we saw in the past was not closely linked to rising inequality. To the extent that rising inequality was driven by the technology-education nexus, the overwhelming bulk of the action was in reduced (relative to trend) educational effort. But the past may well not be a good guide to the present and the future here: Anna Stansbury and Lawrence Summers: On the link between US pay and productivity: “More rapid technological progress should cause faster productivity growth…

…so, if some aspect of faster technological progress has caused inequality, we should see periods of faster productivity growth come alongside more rapid growth in inequality…. Our regressions find no significant relationship between productivity growth and changes in mean-median inequality, and very little relationship between productivity growth and changes in the labour share…. This evidence casts doubt on the idea that more rapid technological progress alone has been the primary driver of rising inequality over recent decades, and tends to lend support to more institutional and structural explanations…