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Devaluation of one’s labor in labor–commodities–money–commodities–labor exchange as a cause of inequality growth

Tangian, Andranik

Abstract: The inequality growth during the last quarter century is explained as caused by a decreasing labor–labor exchange rate, i.e. devaluation of one’s labor in exchange for other’s labor embodied in the commodities affordable for one’s earnings. We show that the productivity growth allows employers to compensate workers with always a lower labor equivalent, i.e., in a sense increasingly underpay works, maintaining however an impression of fair pay due to an increasing purchasing power of earnings. This conclusion is based on the OECD 1990–2014 data for G7 countries (Canada, France, Germany, Italy, Japan, United Kingdom and United States) and Denmark (known for the world least inequality). Finally, it is shown that the dependence between the degree of inequality and the degree of decline of the labor–labor exchange rate is statistically highly significant.


Zugehörige Institution(en) am KIT Institut für Volkswirtschaftslehre (ECON)
Publikationstyp Forschungsbericht
Jahr 2016
Sprache Englisch
Identifikator DOI(KIT): 10.5445/IR/1000055423
ISSN: 2190-9806
URN: urn:nbn:de:swb:90-554233
KITopen ID: 1000055423
Verlag KIT, Karlsruhe
Umfang 43 S.
Serie Working paper series in economics ; 86
Schlagworte Inequality, productivity, hourly earnings, consumer prices, housing prices, labor–labor exchange rate
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