Medium Term Economic Forecast Medium-Term Economic Forecast for the Japanese Economy （44th / Special Report）

Slow US Wage Growth Explained

- Changing Demographic & Employment Trend

Eriko TAKAHASHI: Senior Economist

2017/12/18

Abstract
Despite a seemingly strong labor market, wage growth in the US has remained relatively slow since the Great Recession. What are the underlying causes for this? This report examines the driving forces of sluggish wages with a particular focus on changing demographic and employment trends. The analysis reveals that (A) the slowing and aging of the population, (B) the retirement of baby boomers, (C) the decline in the prime-age labor force participation rate, and (D) shifts in sectoral and occupational composition of employment are potential factors that may have contributed to the wage slowdown. These structural factors or long-term trends are not expected to be reversed in the near future. Consequently, wages may remain on a modest growth trajectory in the long run.

PDFThe 44th Medium-Term Economic Forecast: Special Report Slow US Wage Growth Explained - Changing Demographic & Employment Trends

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