Inflation and Factor Shares

Francisco Alcalá

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We use results from the literature on the determinants of price-cost margins to derive an equation relating labor's share of national income to the inflation rate (as well as to the output gap, the unemployment rate and the capital stock per worker). The equation is tested with a panel of 15 OECD countries. We obtain a robust positive relationship between inflation and the labor share. Our results suggest that disinflation is not distributively neutral, provide empirical support for the distinct concern about price stability shown by trade unions and employers' organizations, and help explaining the negative impact of inflation on growth.

Keywords: Inflation; Functional Distribution of Income; Markups. (search for similar items in EconPapers)
JEL-codes: E25 E31 (search for similar items in EconPapers)
Pages: 18
Date: 2000-05-01
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:460.00

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