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Consistent downtrend in income mobility… a gloomy future ahead?

Tong Kooi Ong
Tong Kooi Ong8/6/2018 07:30 AM GMT+08  • 7 min read
Consistent downtrend in income mobility… a gloomy future ahead?
SINGAPORE (August  6): Anaemic wage growth is a global phenomenon — and one that has stumped central bankers and economists. 
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SINGAPORE (August 6): Anaemic wage growth is a global phenomenon — and one that has stumped central bankers and economists.

Economics 101 teaches us that when unemployment drops, employers competing for a smaller pool of workers will have to pay higher wages, and that will eventually push up inflation.

This inverse relationship is the core of many economic models, including the Phillips curve, which the US Federal Reserve embraces as part of its policy decision-making. But over the past two decades, actual economic statistics suggest that this correlation has broken down.

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