Labor’s Share of GDP
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A Labor’s Share of GDP is a ratio metric based on GDP as a proportion of labor wages.
- Example(s):
- Counter-Example(s):
- See: Business Cycle, Wage, Compensation of Employees, National Accounts, Net Domestic Product, Capital and Labor Substitution Elasticity.
References
2018
- (Cuadrado et al., 2018) ⇒ Francisco Alvarez-Cuadrado, Ngo Van Long, and Markus Poschke. (2018). “Capital-labor Substitution, Structural Change and the Labor Income Share.” In: Journal of Economic Dynamics and Control 87
- ABSTRACT: Recent work has documented declines in the labor income share in the United States and beyond. This paper documents that this decline was more pronounced in manufacturing than in services in the U.S. and in a broad set of other industrialized economies, and shows that a model with cross-sectoral differences in productivity growth and in the degree of capital-labor substitutability is consistent with these trends. We calibrate the model exploiting additional information on the pace of structural change from manufacturing to services, on which the model also has predictions. We then conduct a decomposition to establish the relative importance of several potential drivers of changes in factor income shares and structural change that have been proposed in the literature. This exercise reveals that differences in the degree of capital bias of technical change across sectors, combined with differences in substitution possibilities, are key determinants of the observed patterns.
- QUOTE: Figure 3: The common component of the labor income share in 17 countries, 1970-2007 (displays fitted values from the regressions in equations (3) and (4).)
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/wage_share Retrieved:2015-5-22.
- The wage share (or labor share) is the ratio between compensation of employees (according to the system of National accounts) and one of the following variables:
- gross domestic product at market prices
- gross domestic product at factor cost.
- net domestic product at factor cost (domestic income at factor cost)
- An adjustment is often made so that the wage share reflects only changes in relative incomes and not changes in the composition of employment in employees and number of self-employed. In this case the adjusted wage share is: compensation of employees per employee divided by one of the following:
- gross domestic product at market prices per number of persons in employment (this adjusted wage share is also called real unit labour costs).
- gross domestic product at factor cost per number of persons in employment
- net domestic product at factor cost (domestic income at factor cost) per number of persons in employment
- The wage share is a (rough) indicator for the distribution of income between capital and labour. In the short term it moves countercyclically to the business cycle.
- The wage share (or labor share) is the ratio between compensation of employees (according to the system of National accounts) and one of the following variables:
