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Devaluation of one's labor in labor-commodities-money-commodities-labor exchange as a cause of inequality growth

Listed author(s):
  • Tanguiane, Andranick S.
Registered author(s):

    The inequality growth during the last quarter century is explained as caused by a decreasing labor-labor exchange rate, i.e. devaluation of one's labor in exchange for other's labor embodied in the commodities affordable for one's earnings. We show that the productivity growth allows employers to compensate workers with always a lower labor equivalent, i.e., in a sense increasingly underpay works, maintaining however an impression of fair pay due to an increasing purchasing power of earnings. This conclusion is based on the OECD 1990-2014 data for G7 countries (Canada, France, Germany, Italy, Japan, United Kingdom and United States) and Denmark (known for the world least inequality). Finally, it is shown that the dependence between the degree of inequality and the degree of decline of the labor-labor exchange rate is statistically highly significant.

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    File URL: https://www.econstor.eu/bitstream/10419/129129/1/849506506.pdf
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    Paper provided by Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering in its series Working Paper Series in Economics with number 86.

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    Date of creation: 2016
    Handle: RePEc:zbw:kitwps:86
    Contact details of provider: Web page: http://www.wiwi.kit.edu/

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    1. Schlenker, Eva & Schmid, Kai D., 2013. "Capital income shares and income inequality in the European Union," FZID Discussion Papers 80-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    2. Adler, Martin & Schmid, Kai Daniel, 2013. "Factor Shares and Income Inequality. Empiral Evidence from Germany 2002 – 2008," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 133(2), pages 121-132.
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