Labor’s Share of Income

Timothy Taylor quotes a report by the International Labor Organization showing that labor’s share of income has declined between 1990 and 2009 in 26 out of the 30 countries surveyed. Taylor comments,

When a trend cuts across so many countries, it seems likely that the cause is something cutting across all countries, too. Looking for a “cause” based on some policy of Republicans or Democrats in the U.S. almost certainly misses the point.

This is a stereotypical Tim Taylor find–who else would read through an ILO report?

2 thoughts on “Labor’s Share of Income

  1. His 5th point reads:

    “It’s important to remember that the falling share of labor income is different from a rising level of wage inequality. The share of income going to labor as a whole is falling, and also a greater share of labor income is going to those at the highest levels of income. Both trends mean that those with lower- and middle-incomes are having a tougher time. ”

    Does it mean that? Could it not also mean that lower- and middle-incomes are having an easier time than they did before the period in question, but just not as easy as the higher incomes are having? In other words, does the data presented show that low incomes are worse off in an absolute sense, or just a relative one?

  2. Or could it partially be a reporting artifact? The study talks about growth of the financial sector as perhaps contributing. But since “money” and ‘real wealth’ are only related in an imperfect way, one could imagine processes that “create money” and distribute it without changing real wealth. (But by giving more “money” to the people attached to the financial sector, they would redistribute claims on real wealth.)
    http://www.smbc-comics.com/?id=2855

    All of that of course is only true for that part of the financial sector (if any) that creates “money” without actually creating “real wealth” – I won’t step into into that fight…

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