Labour Productivity, Wages and the Functional Distribution of Income in Portugal: A Sectoral Approach

João Carlos Lopes, José Coelho and Vítor Escária

No 2019/91, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: The main purpose of this paper is to studythe functional distribution of income in Portugal in the long run, considering the period between 1953 and 2017. The labour share in income or value added depends on two fundamental variables, the labour productivity and the average labour compensation.The trends of these variables are quantified, for the aggregate economy and for its main productive sectors. An interesting result emerges, namely the different dynamics across sectors, both for the (unadjusted)wage share (considering only the wages of employees) and for the adjusted labour share (considering also as labour compensation one fraction of mixed income). Moreover, a shift-share analysis is used, in order to distinguish the importanceof each sector’s wage share evolution (“within”effect) and the changes in each sector’s weight (structural changes, or “between”effect). Finally, a first attempt to incorporate the effect of wage inequalityon the functional distribution of income is made, subtracting the labour compensation of the highest paid workers (top 10%, 5% and 1%) in order to calculate the wage share of the (so-called) typical workers.

Keywords: Functional Income Distribution; Labour Share; Sectoral Analysis; Shift-Share Analysis; Wage Inequalities; Portugal. (search for similar items in EconPapers)
JEL-codes: D33 E25 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-eec, nep-hme and nep-mac
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Related works:
Journal Article: Labour productivity, wages and the functional distribution of income in Portugal: A sectoral approach (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp0912019

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