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Labour Productivity, Wages and the Functional Distribution of Income in Portugal: A Sectoral Approach

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  • João Carlos Lopes
  • José Carlos Coelho
  • Vítor Escária

Abstract

The main purpose of this paper is to studythe 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, the 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 importanceof 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 inequalityon 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, 2019. "Labour Productivity, Wages and the Functional Distribution of Income in Portugal: A Sectoral Approach," Working Papers REM 2019/91, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp0912019
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    References listed on IDEAS

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    1. Marta Guerriero, 2019. "The Labor Share of Income Around the World: Evidence from a Panel Dataset," ADB Institute Series on Development Economics, in: Gary Fields & Saumik Paul (ed.), Labor Income Share in Asia, chapter 0, pages 39-79, Springer.
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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:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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