Abstract
I begin by providing a non-technical summary of the Post-Keynesian model of wage-led growth. I then summarise the work of microeconomists and industrial relations researchers on the reasons why real wages have failed to keep pace with labour productivity, leading to a steady decline in the wage share of GDP. These include the decline of trade unions, the erosion of the welfare state and (especially) the increasing ability and willingness of employers to evade and avoid labour market regulation. I conclude that these microeconomic problems need to be solved for a macroeconomic strategy of wage-led growth to be possible.
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