World Economics

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Measuring the Share of Labour in GDP
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Michael Grömling, World Economics, December 2017
There is a view that increasing inequalities in advanced economies are responsible for growth problems and political polarisation. A new impetus has been injected into the analysis of macroeconomic income distribution since if capital’s share is rising this has implications for the personal distribution of income. An international comparison of data from advanced countries does not reveal any widespread or consistent decrease in labour’s share for the past quarter of a century. No pattern is discernible and a number of statistical limitations and data issues need to be taken into account when interpreting the functional distribution of income.
Poles Apart
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Paul Gregg, Kirstine Hansen & Jonathan Wadsworth, World Economics, June 2000
Analysis of labour market performance using individual level data can reach radically different conclusions to those provided by a household-based analysis, using the same source of information. In Britain and other OECD countries the number of households without access to earned income has grown despite rising employment rates. Built around a comparison of the actual jobless rate in households with that which would occur if work were randomly distributed, the authors show that work is becoming increasingly polarised in many countries. Changing household structure can only account for a minority of the rise in workless households, so that labour market failure is the dominant explanation. Polarisation of work will have important welfare and budgetary consequences for any country.

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