The widening gap between labor productivity growth and real wage growth in the United
States has attracted much attention in recent years, since they are supposed to grow in
tandem according to theory. This paper provides an industrial and cross-country
comparative perspective, which has been lacking so far in the literature. The results
suggest that the widening of the gap between productivity growth and real wages growth
was most pronounced in the U.S manufacturing sector, followed by Japan, whereas
European economies in general tend to show smaller gaps. Our analysis of industry
origins of the wage-productivity gap in the aggregate market economy suggests that
across countries, ICT goods and services and distributive services sectors are the
dominant drivers of the aggregate wage-productivity growth gap. Within these industries,
as well as in other industries, worsening terms of trade measured as the difference
between consumer and output prices is the major contributor to the widening gap.