real earnings

Real earnings refer to the amount of goods and services that money earnings can buy. This is determined by comparing nominal earnings (the actual amount of money earned) with the prices of goods and services.

The rise in real earnings is influenced by three main factors:
* Productivity: The output per worker.
* Share of the product: The portion of the output that goes to the worker.
* Exchange rate: How the worker's product is traded for other goods and services.

Historically, real earnings have significantly increased in industrialized countries, largely due to rising productivity. For example, between 1860 and 1960, real earnings of manual workers rose substantially in countries like France, Germany, the United Kingdom, and the United States. When considering the standard of living, other factors like reduced family size, urbanization, job satisfaction, and shorter working hours also play a role.1