Real wages may rise during economic downturns, challenging conventional wisdom.
Real wages may not always increase when the economy grows due to changes in monetary policy. A study using a complex economic model found that, contrary to popular belief, real wages can actually decrease after a monetary expansion. This means that the data we use to measure real wages might not always reflect the true picture accurately. The findings suggest that the relationship between wages and economic growth is more nuanced than previously thought, especially when considering factors like sticky wages.