Labor share
Part of a series on |
Economics |
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In
which is also known as theThe wage share is
Definition
The wage share can be defined in various ways, but
Often the capital share and labor share are assumed to sum to 100%, so that each can be deduced from the other. For example, the Bureau of Labor Statistics defines the labor share in a given sector (LS) as the ratio of labor compensation paid in that sector (C) to current dollar output (CU), i.e. LS = C / CU. The non-labor or capital share (NLS) is defined as 1 − LS.[7]
In Capital in the Twenty-First Century, Piketty described the accounting identity α = r × β as the 'first fundamental law of capitalism', where α represents the capital share, r is the rate of return on capital, and β is the capital to income ratio.[8] Piketty defined the wage share as 1 − α.[9]
Because the
History
The importance of the distribution of income between the
Cobb and Douglas's Theory of Production (1928) introduced empirically determined constants α and β which corresponded to the capital and labor share respectively. Cobb and Douglas found that the wage share was about 75%.[12]: 163 For most of the 20th century, constant labor share was a stylized fact[3]: 14 known as Bowley's law.
Historical measurements of the wage share can be charted using the Federal Reserve Bank of St. Louis's FRED tool, which includes time series published by the Bureau of Labor Statistics[13] and Bureau of Economic Analysis.[14]
See also
- Factors of production
- Factor shares
- Compensation of employees
- Measures of national income and output
- Value added
- Income distribution
- Labor economics
- Rate of exploitation
References
- ^ G20 Employment Working Group (2015). The Labour Share in G20 Economies (PDF). 2015 G20 Antalya summit.
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: CS1 maint: numeric names: authors list (link) - ^ 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.
- ^ )
- JSTOR 2225182.
- .
- World Economic Outlook. p. 167.
- ^ Bureau of Labor Statistics (April 1997). "Productivity Measures: Business Sector and Major Subsectors" (PDF). Handbook of Methods. p. 95.
- ^ Piketty, Thomas (2013). Capital in the Twenty-First Century. Harvard University Press.
- ^ Piketty, Thomas. "Table S6.1. The capital-labor split in Britain, 1770–2010" (XLS). Retrieved 25 September 2016.
- S2CID 153629247.
- ^ Ricardo, David (1817). "Preface". On the Principles of Political Economy and Taxation. John Murray, London. p. R3.
- ^ Cobb, Charles; Douglas, Paul (1928). "A Theory of Production" (PDF). American Economic Review. 18 (Supplement): 139–165. Retrieved 26 September 2016.
- ^ Bureau of Labor Statistics. "Business Sector: Labor Share". Federal Reserve Economic Data. Retrieved 25 September 2016.
- ^ Bureau of Economic Analysis. "Shares of gross domestic income: Compensation of employees, paid: Wage and salary accruals: Disbursements: To persons". Federal Reserve Economic Data. Retrieved 25 September 2016.
Further reading
- Labour Income Share Ratios for OECD countries, 1995–2010, at OECD.Stat
- Michael D. Giandrea and Shawn Sprague. Estimating the U.S. labor share. Monthly Labor Review, Feb 2017, https://doi.org/10.21916/mlr.2017.7