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On Measuring the Labour Income Share

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  • Benjamin Caswell

Abstract

The labour income share plays a key role as a parameter in macroeconomic models and has motivated a body of literature with regards to its apparent decline. Despite its crucial importance, there exists no robust consensus on how to quantify the labour income share in practice. This paper explores some of the conceptual issues surrounding measurement and provides a novel empirical application utilising UK sector level national accounts data. Specifically, this involves imputing proprietor labour income at the sector level and then aggregating up to the whole economy. This paper demonstrates that the disaggregated approach amplifies measurement errors under certain imputation assumptions.

Suggested Citation

  • Benjamin Caswell, 2024. "On Measuring the Labour Income Share," National Institute of Economic and Social Research (NIESR) Discussion Papers 556, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:556
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    References listed on IDEAS

    as
    1. Robert Z. Lawrence, 2015. "Recent Declines in Labor's Share in US Income: A Preliminary Neoclassical Account," NBER Working Papers 21296, National Bureau of Economic Research, Inc.
    2. Ann E. Harrison & Margaret S. McMillan, 2006. "Outsourcing Jobs? Multinationals and US Employment," NBER Working Papers 12372, National Bureau of Economic Research, Inc.
    3. Willford Isbell King, 1930. "The National Income and Its Purchasing Power," NBER Books, National Bureau of Economic Research, Inc, number king30-1, October.
    4. Nicholas Kaldor, 1961. "Capital Accumulation and Economic Growth," International Economic Association Series, in: D. C. Hague (ed.), The Theory of Capital, chapter 0, pages 177-222, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    aggregate income; labour income share; national accounts; measurement;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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