The labor share and income inequalitysome empirical evidence for the period 1990-2015

  1. Iñaki Erauskin Iurrita 1
  1. 1 Deusto Business School, University of Deusto
Revista:
Applied economic analysis

ISSN: 2632-7627

Año de publicación: 2020

Volumen: 28

Número: 84

Páginas: 173-175

Tipo: Artículo

DOI: 10.1108/AEA-04-2020-0028 DIALNET GOOGLE SCHOLAR lock_openAcceso abierto editor

Otras publicaciones en: Applied economic analysis

Resumen

Purpose The purpose of this paper is to analyze empirically the relationship between the labor share and income inequality, as measured by the Gini coefficient and by the income shares for different quintiles, during the period 1990–2015 for 62 developed and developing countries. Design/methodology/approach This study uses panel data techniques to analyze empirically the relationship between the labor share and income inequality. Findings This paper finds that a lower labor share is associated with a higher Gini coefficient. A lower labor share is found to be strongly associated with a smaller income share for the lowest two quintiles and larger income share for the highest quintile and weakly associated with a smaller income share for the third and fourth quintiles. Moreover, this paper finds that the lower the quintile, the stronger the impact of the labor share on the income share of the quintile. Social implications Policymakers should take into account the evolution of the labor share. Public policies that improve labor market outcomes, such as those aimed to promote participation in the labor market and strengthen the human capital of low-income groups, seem necessary to prevent the rise in economic inequalities. Moreover, as the digital transformation of society progresses, policies to promote skill deepening may have an important role in reversing excessive inequalities. Originality/value How changes in the labor share are associated with changes in the Gini coefficient, and how this is driven by income shares for different quintiles, for a broad range of countries during the most recent period, has not been comprehensively studied using panel data techniques.

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Información de financiación

Financial support from Programa de Movilidad del Personal Investigador del Departamento de Educación, Política Lingüística y Cultura del Gobierno Vasco and Programa de apoyo a los grupos del sistema universitario vasco del Departamento de Educación, Política Lingüística y Cultura del Gobierno Vasco (Grupo de investigación IT885-16) is gratefully acknowledged.

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