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Equities and class struggle

David Greenwald and Sydney Ludvigson of New York University and Martin Lettau at the University of California Berkeley have estimated that more than all of the rise in US share prices since 1980 (adjusted for inflation) have come because profits rose at the expense of wages. By contrast, fluctuations in productivity growth in this time had little effect, although slower productivity since 2008 has depressed prices.

There's a simple reason why productivity growth doesn't much matter for shares, says Professor Ludvigson. It's that variations in them benefit or hurt workers more than shareholders; faster productivity growth means faster real wage growth, and slower productivity growth means slower real wage growth.

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