Getting Income Shares Right
AbstractMany widely used economic models implicitly assume that income shares should be identical across time and space. Although time series data from industrial countries appear consistent with this notion, cross-section data generally appear to contradict the assumption of constant income shares. A commonly used calculation suggests that labor shares of national income vary from about 0.05 to about 0.80 in international cross-section data. This paper suggests, however, that this widely used approach underestimates the labor income of the self-employed and other proprietors. Several adjustments for calculating labor shares are identified and compared. All of them yield data that appear broadly consistent with the hypothesis that labor shares for most countries fall in the range of 0.65 to 0.80
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Bibliographic InfoPaper provided by Department of Economics, Williams College in its series Department of Economics Working Papers with number 2001-11.
Date of creation: May 2001
Date of revision:
Publication status: published in Journal of Political Economy, April 2002, v. 110, iss. 2, pp. 458-74
Other versions of this item:
- E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
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