The distribution of income between labor and capital is not stable: But why is that so and why does it matter?

Josef Brada

Economic Systems, 2013, vol. 37, issue 3, 333-344

Abstract: I review the literature on labor's share of national income in developed and developing countries. These shares have varied systematically over the post-World War II period, rising until the late 1970s and then falling until now. Explanations for the decline in labor's share include technical progress, globalization and a decline in labor's bargaining power, but none of these explanations can account for both the rise and the decline of labor shares over time and for the similar pattern in developed and developing countries. However, movements in oil prices can account for these movements if energy is included in the production function. Such an explanation has broad implications for income distribution, energy conservation and for the modern theory of growth.

Keywords: Factor shares; Labor incomes; Globalization; Technological progress; Energy; Economic growth (search for similar items in EconPapers)
JEL-codes: D33 E23 E25 J31 O40 Q43 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:37:y:2013:i:3:p:333-344

DOI: 10.1016/j.ecosys.2013.04.001

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