Functional Income Distribution and Its Role in Explaining Inequality

November 24, 2015

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper is motivated by two parallel trends: the declining labor share of income and increasing inequality. Micro and macroeconomic data, covering up to 93 countries between 1970 and 2013, are used to assess whether the declining labor share of income has been a key factor driving growing inequality. The major conclusion is that changes in income inequality across a wide range of countries have been driven significantly by changes in the inequality of wages, while the distribution of income between labor and capital has not been a major factor.

Subject: Income distribution, Income inequality, Labor, Labor share, National accounts, Personal income

Keywords: distribution, factor income distribution, Global, income, Income distribution, income inequality, Income inequality, income share, income survey, inequality, inequality measure, Labor share, market income, Personal income, pseudo-Gini index, wage dispersion, wage distribution, wage share, WP

Pages:
33
Volume:
2015
DOI:
https://doi.org/10.5089/9781513549828.001
Issue:
244
Series:
Working Paper No. 2015/244
Stock No:
WPIEA2015244
ISBN:
9781513549828
ISSN:
1018-5941

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