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The personal and the factor distributions of income in a cross-section of countries


  • Emilie Daudey
  • Cecilia Garcia-Penalosa


The shares of capital and labour in national income vary substantially both over time and across countries. This paper shows that the factor distribution of income is an essential determinant of the personal distribution of income. We use cross-country and panel data for a group of developed and developing countries to show that a larger labour share is associated with a lower Gini coefficient of personal incomes. This effect is not only statistically significant but also economically important. An increase in the labour share in Mexico to that observed in the US would reduce the Gini coefficient of the former by between two and five points.

Suggested Citation

  • Emilie Daudey & Cecilia Garcia-Penalosa, 2007. "The personal and the factor distributions of income in a cross-section of countries," Journal of Development Studies, Taylor & Francis Journals, vol. 43(5), pages 812-829.
  • Handle: RePEc:taf:jdevst:v:43:y:2007:i:5:p:812-829
    DOI: 10.1080/00220380701384406

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    References listed on IDEAS

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    Cited by:

    1. Eva Schlenker & Kai Schmid, 2015. "Capital income shares and income inequality in 16 EU member countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(2), pages 241-268, May.
    2. Herzer, Dierk, 2014. "Unions and income inequality: a heterogenous cointegration and causality analysis," Working Paper 146/2014, Helmut Schmidt University, Hamburg.
    3. Eva Schlenker & Kai Daniel Schmid, 2013. "Capital Income Shares and Income Inequality in the European Union," IMK Working Paper 119-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Molero-Simarro, Ricardo, 2017. "Inequality in China revisited. The effect of functional distribution of income on urban top incomes, the urban-rural gap and the Gini index, 1978–2015," China Economic Review, Elsevier, vol. 42(C), pages 101-117.
    5. Damiani, Mirella & Pompei, Fabrizio & Ricci, Andrea, 2012. "Labour share and employment protection in European economies," MPRA Paper 43058, University Library of Munich, Germany.
    6. Luciano BOGGIO & Vincenzo DALL’AGLIO & Marco MAGNANI, 2010. "On Labour Shares in Recent Decades: A Survey," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 118(3), pages 283-333.
    7. Gustav A. Horn & Sebastian Gechert & Miriam Rehm & Kai D. Schmid, 2014. "Wirtschaftskrise unterbricht Anstieg der Ungleichheit," IMK Report 97-2014, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    8. Benedikt Goderis & Samuel W. Malone, 2011. "Natural Resource Booms and Inequality: Theory and Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 388-417, 06.

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