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Labour productivity, wages and the functional distribution of income in Portugal: A sectoral approach

Author

Listed:
  • João Carlos Lopes

    (REM – Research in Economics and Mathematics, Universidade de Lisboa, Lisbon, Portugal
    UECE – Research Unit on Complexity and Economics, Universidade de Lisboa, Lisbon, Portugal
    ISEG – School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal)

  • José Carlos Coelho

    (UECE – Research Unit on Complexity and Economics, Universidade de Lisboa, Lisbon, Portugal
    ISEG – School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal)

  • Vítor Escária

    (CIRIUS – Research Centre on Regional and Urban Economics, Universidade de Lisboa, Lisbon, Portugal
    UECE – Research Unit on Complexity and Economics, Universidade de Lisboa, Lisbon, Portugal
    ISEG – School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal)

Abstract

The main purpose of this paper is to study the functional distribution of income in Portugal in the long run, considering the period between 1953 and 2017. The labour share in income or value added depends on two fundamental variables, labour productivity and the average labour compensation. The trends of these variables are quantified for the aggregate economy and for its main productive sectors. An interesting result emerges, namely the different dynamics across sectors, both for the (unadjusted) wage share (considering only the wages of employees) and for the adjusted labour share (considering also as labour compensation one fraction of mixed income). Moreover, a shift-share analysis is used, in order to distinguish the importance of each sector's wage share evolution (“within” effect) and the changes in each sector's weight (structural changes, or “between” effect). Finally, a first attempt to incorporate the effect of wage inequality on the functional distribution of income is made, subtracting the labour compensation of the highest paid workers (top 10%, 5% and 1%) in order to calculate the wage share of the (so-called) "typical" workers.

Suggested Citation

  • João Carlos Lopes & José Carlos Coelho & Vítor Escária, 2021. "Labour productivity, wages and the functional distribution of income in Portugal: A sectoral approach," Society and Economy, Akadémiai Kiadó, Hungary, vol. 43(4), pages 331-354, December.
    • Handle: RePEc:aka:soceco:v:43:y:2021:i:4:p:331-354
    DOI: 10.1556/204.2021.00013
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    References listed on IDEAS

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    Cited by:

    1. Martin S. Eichenbaum & Miguel Godinho de Matos & Francisco Lima & Sergio Rebelo & Mathias Trabandt, 2020. "Expectations, Infections, and Economic Activity," NBER Working Papers 27988, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    functional income distribution; labour share; sectoral analysis; shift-share analysis; wage inequalities; Portugal;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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