The role of wages in the current financial crisis—as a cause as well as a solution—has yet to be fully understood. In this issue, contributors look at the policy roots of growing wage inequality, secular decline in the wage share of national income in recent decades, and how these developments are intertwined with the financial crisis. The essays critique mainstream economic analysis of labor markets and present alternative frameworks to better understand the role that wages can play in a recovery strategy.
Elements of such a strategy, including relinking wages to productivity gains and improving minimum wage floors, are discussed. Other current trends related to the crisis are examined, such as how in Greece the response to fiscal crisis has evolved into a fullfledged attack on labor and how this may reflect future policy responses in the rest of Europe.
