On April 26, the Economic Policy Institute released a paper by Lawrence Mishel entitled *The Wedges between Productivity and Median Compensation Growth**.

*According to Mishel's summary of the paper: *"*The objective of our new paper is to provide a comprehensive and consistent decomposition of the factors explaining the divergence between growth in real median compensation (note the paper focuses on median wages while I have simplified the analysis here to focus on median compensation) and labor productivity since 1973 in the United States, with particular attention to the post-2000 period. In particular, the paper identifies the relative importance of three wedges driving the median compensation-productivity gap: 1) rising compensation inequality, 2) declining share of labor compensation in the economy (the shift from labor to capital income), and 3) divergence of consumer and output prices."

Click below for a link the the summary, which includes a link to the paper itself:*

http://www.epi.org/blog/understanding-wedge-productivity-median-compensation... *