Labor share

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In economics, the wage share or labor share is the part of national income, or the income of a particular economic sector, allocated to wages (labor). It is related to the capital or profit share, the part of income going to capital,[1] which is also known as the K–Y ratio.[2] The labor share is a key indicator for the distribution of income.[3]

The wage share is countercyclical;[3]: 13  that is, it tends to fall when output increases and rise when output decreases. Despite fluctuating over the business cycle, the wage share was once thought to be stable, which Keynes described as "one of the most surprising, yet best-established facts in the whole range of economic statistics".[4] The wage share has declined in most developed countries since the 1980s.[5][6]

  1. ^ G20 Employment Working Group (2015). The Labour Share in G20 Economies (PDF). 2015 G20 Antalya summit.{{cite conference}}: CS1 maint: numeric names: authors list (link)
  2. ^ Madsen, Jakob; Minniti, Antonio; Venturini, Francesco (2015). "Assessing Piketty's laws of capitalism" (PDF). Monash University. Archived from the original (PDF) on 2016-03-29. Retrieved 2016-09-25.
  3. ^ a b Schneider, Dorothee (2011). "The Labor Share: A Review of Theory and Evidence" (PDF). SFB 649, Humboldt-Universität zu Berlin. doi:10.18452/4357. {{cite journal}}: Cite journal requires |journal= (help)
  4. ^ Keynes, John Maynard (1939). "Relative Movements of Real Wages and Output". The Economic Journal. 49 (193): 48. doi:10.2307/2225182. JSTOR 2225182.
  5. ^ OECD. "Labour Losing to Capital: What Explains the Declining Labour Share?" (PDF). OECD Employment Outlook 2012.
  6. ^ International Monetary Fund (April 2007). "The Globalization of Labor" (PDF). Spillovers and Cycles in the Global Economy. World Economic Outlook. p. 167.