The Declining Labor Share of Income
We use two distinct panel datasets to extract and examine data on the labor share of output. From the first, we examine trends in the economy-wide labor share and from the second, we examine trends in the labor share of the manufacturing sector over the last three decades. Both datasets show that labor shares have decreased, starting from about 1980, in most regions of the world. This finding is robust to adjustments for self-employment as well as adjustments for unbalanced panel structure. Furthermore, we present evidence that as a first approximation, this decrease is driven by declines in intra sector labor shares as opposed to movements in activity towards sectors with lower labor shares.
|Date of creation:||Nov 2010|
|Publication status:||Published as background research for the 2010 Human Development Report.|
|Contact details of provider:|| Postal: 304 E 45th Street, FF-12th Floor, New York, NY, 10017|
Web page: http://hdr.undp.org
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- Branko Milanovic, 2005.
"Global Income Inequality: What It Is And Why It Matters?,"
- Milanovic, Branko, 2006. "Global income inequality : what it is and why it matters," Policy Research Working Paper Series 3865, The World Bank.
- Branko Milanovic, 2006. "Global Income Inequality: What It Is And Why It Matters?," Working Papers 26, United Nations, Department of Economics and Social Affairs.
- Alan B. Krueger, 1999. "Measuring Labor's Share," American Economic Review, American Economic Association, vol. 89(2), pages 45-51, May.
- Alan Krueger, 1999. "Measuring Labor's Share," NBER Working Papers 7006, National Bureau of Economic Research, Inc.
- Alan B. Krueger, 1999. "Measuring Labor's Share," Working Papers 792, Princeton University, Department of Economics, Industrial Relations Section..
- Luis F. Lopez-Calva & Nora Lustig, 2009. "The recent decline of inequality in Latin America: Argentina, Brazil, Mexico and Peru," Working Papers 140, ECINEQ, Society for the Study of Economic Inequality.
- Timmer, Marcel P. & Szirmai, Adam, 2000. "Productivity growth in Asian manufacturing: the structural bonus hypothesis examined," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 371-392, December.
- Branko Milanovic, 2003. "The Ricardian Vice: Why Sala-i-Martin’s calculations of world income inequality are wrong," HEW 0305003, EconWPA.
- Sudhir Anand & Paul Segal, 2008. "What Do We Know about Global Income Inequality?," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 57-94, March. Full references (including those not matched with items on IDEAS)
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