--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-31/explaining-the-gap-between-productivity-and-median-wage-growth-in-canada-1976-2014/" title: "Explaining the Gap between Productivity and Median Wage Growth in Canada, 1976-2014" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T07:40:54+00:00" date_modified: "2026-07-13T07:40:54+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2016" ipm_keyword: - "Canada" - "decomposition" - "hollowing out" - "inequality" - "labour share" - "median earnings" - "middle class" - "productivity" - "terms of trade" - "wages" ipm_research_theme: - "Labour" ipm_country_focus: - "Canada" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # Explaining the Gap between Productivity and Median Wage Growth in Canada, 1976-2014 Canonical URL: https://csls.ca/ipm-archive/ipm-issue-31/explaining-the-gap-between-productivity-and-median-wage-growth-in-canada-1976-2014/ # Explaining the Gap between Productivity and Median Wage Growth in Canada, 1976-2014 [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-31-3-Uguccioni.pdf) Cite this article × Cite this article as: Uguccioni, James. 2016. “Explaining the Gap between Productivity and Median Wage Growth in Canada, 1976-2014.” International Productivity Monitor, No. 31 (Fall 2016): 37–56. https://www.csls.ca/ipm-archive/ipm-issue-31/explaining-the-gap-between-productivity-and-median-wage-growth-in-canada-1976-2014/ ## Author: - James Uguccioni Centre for the Study of Living Standards (CSLS) ## IPM Issue 31 Fall 2016 pp. 37–56 ## Related IPM articles [The Relationship between Efficiencies Defenses for Mergers and TFP Growth Robin Shaban Fall 2025 | IPM Issue 49 | pp. 82–102](https://csls.ca/ipm-archive/ipm-issue-49/the-relationship-between-efficiencies-defenses-for-mergers-and-tfp-growth/) [Adult Skills and Productivity: New Evidence from PIAAC 2023 Dan Andrews, Balázs Égert, Christine de La Maisonneuve Fall 2025 | IPM Issue 49 | pp. 41–63](https://csls.ca/ipm-archive/ipm-issue-49/adult-skills-and-productivity-new-evidence-from-piaac-2023/) [Appendix: Variable Definitions and Country/Sector Coverage for Regulatory Reform Analysis Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 1–18](https://csls.ca/ipm-archive/ipm-issue-49/appendix-variable-definitions-and-country-sector-coverage-for-regulatory-reform-analysis/) [The Potential Impact of Pro-competitive Regulatory Reforms on Productivity and Growth in Canada Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 3–40](https://csls.ca/ipm-archive/ipm-issue-49/the-potential-impact-of-pro-competitive-regulatory-reforms-on-productivity-and-growth-in-canada/) [IPM Issue 49 Editors’ Overview Andrew Sharpe, Bart van Ark, Paul Schreyer Fall 2025 | IPM Issue 49 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-49/) [Appendix: UK Productivity Growth Rates Across Data Vintages and Studies Josh Martin Spring 2025 | IPM Issue 48 | pp. 65–73](https://csls.ca/ipm-archive/ipm-issue-48/appendix-uk-productivity-growth-rates-across-data-vintages-and-studies/) [Opportunities and Risks of Artificial Intelligence for Productivity Francesco Filippucci, Peter Gal, Katharina Laengle, Matthias Schief, Filiz Unsal Spring 2025 | IPM Issue 48 | pp. 1–26](https://csls.ca/ipm-archive/ipm-issue-48/opportunities-and-risks-of-artificial-intelligence-for-productivity/) [Using Ecosystem Accounting to Integrate the Environment in Measures of Multifactor Productivity Carl Obst Fall 2024 | IPM Issue 47 | pp. 87–108](https://csls.ca/ipm-archive/ipm-issue-47/using-ecosystem-accounting-to-integrate-the-environment-in-measures-of-multifactor-productivity/) [Eroding Natural Capital: An Alternative Explanation for the Secular Decline in Productivity Growth Christina Caron Fall 2024 | IPM Issue 47 | pp. 109–147](https://csls.ca/ipm-archive/ipm-issue-47/eroding-natural-capital-an-alternative-explanation-for-the-secular-decline-in-productivity-growth/) [How Does Industrial Policy Impact Output, Hours and Productivity? The Canadian Experience Tim Sargent Fall 2024 | IPM Issue 47 | pp. 39–53](https://csls.ca/ipm-archive/ipm-issue-47/how-does-industrial-policy-impact-output-hours-and-productivity-the-canadian-experience/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn Canadian labour is more productive than ever before, but there is a pervasive sense among Canadians that the living standards of the ‘middle class’ have been stagnating. Indeed, between 1976 and 2014, median real hourly earnings grew by only 0.09 per cent per year, compared to labour productivity growth of 1.12 per cent per year. We decompose this 1.03 percentage-point growth gap into four components: rising earnings inequality; changes in employer contributions to social insurance programs; rising relative prices for consumer goods; and a decline in labour’s share of aggregate income. Our main result is that rising earnings inequality accounts for half the 1.03 percentage-point gap, with a decline in labour’s income share and a deterioration of labour’s purchasing power accounting for the remaining half. Further analysis of the inequality component reveals that real wage growth in recent decades has been fastest at the top and at the bottom of the earnings distribution, with relative stagnation in the middle. Our findings are consistent with a ‘hollowing out of the middle’ story, rather than a ‘super-rich pulling away from everyone else’ story. efitted the middle class. Too often, the benefits La main-d’œuvre canadienne est plus productive que jamais, mais il existe un sentiment généralisé parmi les Canadiens que le niveau de vie de la « classe moyenne » stagne. En effet, entre 1976 et 2014, les gains horaires réels médians n’ont augmenté que de 0,09 % par année, comparativement à une croissance de la productivité du travail de 1,12 % par année. Nous décomposons cet écart de croissance de 1,03 point de pourcentage en quatre composantes : la hausse de l’inégalité des gains; les variations des cotisations des employeurs aux programmes d’assurance sociale; la hausse des prix relatifs des biens de consommation; et un recul de la part du travail dans le revenu global. Notre principal résultat est que la hausse de l’inégalité des gains explique la moitié de l’écart de 1,03 point de pourcentage, le recul de la part du revenu du travail et la détérioration du pouvoir d’achat du travail expliquant la moitié restante. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-31-3-Uguccioni.pdf)