Low price and wage inflation Not everyone benefits from a more closely integrated global economy and new technology. In many countries, the competition for low-skilled jobs has intensified, depressing wages for these workers. On the other hand, technological advances have pushed up demand for high-skilled labour for which there is a wage premium. The result is wider wage gaps. The income distribution between labour and capital has also changed. It had long been a widely-held view among economists that the labour share of GDP would remain fairly constant over time. Keynes described the stability of the labour share as “one of the most surprising, yet best-established, facts in the whole range of economic statistics”.6 Yet since 1980, corporate profits have risen faster than wages (Chart 6). 6 Keynes, J.M (1939): "Relative Movements of Real Wages and Output", The Economic Journal 49 (193), pp 34–51. 6  Norges Bank  Chart 6 Labour share. Labour costs as a share of GDP. 1) Selected advanced economies. Percent 55  55  54  54  53  53  52  52  51  51  50 1978  1983  1988  1993  1998  2003  2008  2013  Economic perspectives 15 february 2018  50 2018  1) Belgium, Denmark, Finland, France, Germany (data for West Germany before 1992), Ireland, Italy, Japan, Netherlands, Portugal, Spain, South Korea, Sweden, Switzerland, the UK and the US. GDP−weighted average.
Variables are selected according to the number of Bloomberg alert subscriptions, but data on consumer prices, producer prices and wages are excluded. BIS central bankers’ speeches  9  Chart 7: Interest rate reaction to FOMC meeting 18/9/2013(a) UK  Change since 12pm (bps)  US  15  Bernanke's conference ends  10  FOMC  5 0 -5 -10 -15 -20 -25 -30  12:00 15:00 18 Sep 2013  18:00  21:00  08:00 19 Sep  11:00  14:00  -35 17:00  Source: Bloomberg. (a) 1-year OIS rates, 2-years forward. Chart 8: Sensitivity of UK interest rates to economic news(a)  Sensitivity of UK 2y1y government yields to UK economic surprises  Basis points per one standard deviation surprise  Sensitivity of UK 2y1y government yields to US economic surprises  10 8 6 4 2 0 -2 -4 -6 -8  2006 - 08  2009 - Apr 2013  May 2013 - latest  Aug 2013 IR 14 Oct 2013  -10  Sources: Bloomberg and Bank of England calculations. (a) Based on bi-variate regressions of daily yield changes on the daily average surprise in the variables within the Economic Surprise Indicators. The diamond shows the regression coefficient and the bars indicate plus or minus two standard deviations.