The incomes and financing balance of individuals and companies
AbstractThe article begins by establishing that the share of wages in GDP has declined quite sharply in Belgium over the past five years. The fall in the wage share in 2003-2005 was due partly to the deteriorating economic conditions at the beginning of this century. It can also be seen as a continuation of the decline which started in the early 1980s, attributable to structural developments such as globalisation, technological progress and the growing importance of the services sector. However, the downward trend in the total disposable income of individuals as a percentage of GDP is due mainly to the reduction in their net interest income, which is in turn attributable to falling interest rates. In absolute terms, however, the disposable income of individuals has risen, even if inflation is taken into account. The main effect of the reduction in the gross disposable income of individuals in relation to GDP has been to cut the savings ratio, as consumption expenditure has only fallen slightly as a percentage of GDP. Moreover, since 2004 individuals’ investment spending has surged, reducing their financing balance to less than 1 p.c. of GDP. The primary counterpart of the recent contraction of the wage share has been the strong rise in the gross operating surplus of companies. On the other hand, companies have also paid more taxes on income and wealth, made higher net dividend payments to other sectors, and invested more in fixed assets. Nonetheless, the financing balance of companies has risen steadily, reaching an average of 2.4 p.c. of GDP in the past three years, so that they have been able to move gradually towards financing more of their investment out of internal resources, thus further consolidating their balance sheets.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by National Bank of Belgium in its journal Economic Review.
Volume (Year): (2008)
Issue (Month): III (September)
Contact details of provider:
Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: http://www.nbb.be/
More information through EDIRC
wage share; operating surplus; disposable income; financing balance;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- V. Baugnet & L. Dresse, 2011. "Developments in private consumption over the past three years," Economic Review, National Bank of Belgium, issue II, pages 47-58, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.