Functional Income Distribution and Its Role in Explaining Inequality

Maura Francese and Carlos Mulas-Granados

No 2015/244, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; income; market income; inequality; distribution; factor income distribution; wage share; income inequality; income share; pseudo-Gini index; wage distribution; income survey; inequality measure; wage dispersion; Income inequality; Personal income; Income distribution; Labor share; Global (search for similar items in EconPapers)
Pages: 33
Date: 2015-11-24
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Citations: View citations in EconPapers (24)

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