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Whether Wages Should Accord with Labour Productivity: Spatial Perspective

Kirill V. Rostislav – Junior Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The discrepancy between the wage index and the labor productivity index is often seen as a threat to the economic growth sustainability. Critics of linking the two indices emphasize that different deflators are used for them. The article clarifies and complements this criticism by pointing out three circumstances: differences in the share of non-market output, the volume index of which is obtained by extrapolating the number of employed; mismatch of production and consumption sites; unsatisfactory labor productivity as a measure of the contribution of labor costs to production.

Key words: labour productivity, wages, non-market output, CPI, regional differences, labour quality, capital measurement.

JEL-codes: C43, E24, E25, E31, J31.