This website uses cookies to ensure you have the best experience. Learn more

Behind The Decline In Labor’s Share Of Income

823 words - 4 pages

02.03.2012
Economic Trends

Behind the Decline in Labor’s Share of Income
Margaret Jacobson and Filippo Occhino
Labor income, which includes wages, salaries, and benefits, has been declining as a share of total income earned in the U.S. Here, we look at the cyclical and long-run factors behind this development. Labor and capital both contribute to the production of goods and services in the economy, and each gets compensated with income in return. The share of total income accruing to labor, the labor income share, is a closely watched indicator because it can affect a wide range of other important macroeconomic variables, such as income distribution, human capital accumulation, the ...view middle of the document...

In the business sector, the gap between compensation per

hour and productivity—the wage-productivity gap—remained quite stable before 1980, began widening during the 1980s and 1990s, and opened up more visibly during the last decade.

Productivity growth in the nonfarm business sector averaged 2.7 percent before 1973, then 1.4 percent during the 1974-1995 slowdown, and 2.5 percent after the 1995 acceleration. Compensation per hour lagged behind productivity during the slowdown and more so during the acceleration, when it averaged 2 percent, almost half a percentage point less than productivity.

Economists have identified three long-term factors that can explain why the wage-productivity gap has widened and the share of income accruing to labor has declined. The first is the decrease in the bargaining power of labor, due to changing labor market policies and a decline of the more unionized sectors. Another factor is increased globalization and trade openness, with the resulting migration of relatively more labor-intensive sectors from advanced economies to emerging economies. As a consequence, the sectors remaining in the advanced economies are relatively less labor-intensive, and the average share of labor income is lower. The third factor is technological change connected with improvements in information and communication technologies, which has raised the marginal productivity and return to capital relative to labor. In addition to these long-run factors, some cyclical factors are...

Other Essays Like Behind the Decline in Labor’s Share of Income

Is the United States Following in the Footsteps of Ancient Rome’s Decline?

1325 words - 6 pages Essay "Is the United States following in the footsteps of ancient Rome’s decline?" There are many areas of similarity when contrasting the United States with the Roman Empire. The greatest nation on earth today is the United States. The main factors supporting this are that the U.S. is the economic leader in the world. At this time, the U.S. has the strongest military of any nation. There is relevance with what is happening in the United

“Cleveland: Confronting Decline in an American City” - Understanding Problems of the Us Cities

1308 words - 6 pages “Cleveland: Confronting Decline in an American City” * Understanding Problems of the US Cities During the first half of the 20th century, people had poured into big cities like Cleveland to look for unlimited opportunities and prospering future. However, for years now, people have been leaving their cities, as it has happened in Cleveland, for suburbs, mostly for the same reason that they came to cities in the first place: to pursue a

Are Political Parties in Decline in the Us

720 words - 3 pages Are Political Parties in Decline in the US? The theory that parties in the US are in serious decline gained popularity in the early 70s with political writers, analysts and commentators like Broder publishing works claiming their demise. But following the popularisation of this opinion came party renewal theorists with strong claims to suggest political parties in the US were experiencing increasing support. By looking at a range of factors

Behind the Adventures of Huckleberry Finn

1025 words - 5 pages Behind The Adventures of Huckleberry Finn stands the famous Mark Twain. Even though Mark Twain writes a literal masterpiece, many critics have deprived the novel of its worth. Some believe the story only contains racism. But honestly, did Twain write to degrade the black population? Of course not! Twain did not spend eight years of his time to create a novel based on the corruption of the colored people. In all actuality, Twain unites the story

The Rising Levels of Congestion and Air Pollution Found in Most of the World's Cities Can Be Attributed Directly to the Rapidly Increasing Number of Private Cars in Use. in Order to Reverse This...

700 words - 3 pages share of the newly-registered motor vehicles in the whole of Malaysia are in average of 20% increase every year since 1991. With this growing number of vehicles, certain life risks and hazard arise that threaten the well being of its dwellers. Before the coming of the millennium, humans battle the health risks that come along. Walking along any street in Kuala Lumpur, the average observer can smell cars’ fumes in the air, see the environment

EXISTENTIALISM AND THE DECLINE OF RELIGION AT THE END OF THE 19TH CENTURY

1014 words - 5 pages EXISTENTIALISM AND THE DECLINE OF RELIGION AT THE END OF THE 19TH CENTURY During the 19th century, several ideas were developed about the decreasing power of religion and the meaning of life. These ideas were supported or rejected through numerous writings. Herman Melville's Billy Budd embraces God and the morals of Christianity while Mark Twain's Mysterious Stranger reflects and supports the ideas of existentialism and a decline in religion in

Peanut oil press users to share the truth about your operating principle of it under your

520 words - 3 pages . Peanut oil, choline, also to improve the human brain's memory, slow decline of brain function. Benefits also makes a lot of peanut oil peanut oil press sold, sales in the market is also highly climb. Many users do not know how to go home after buying the operation press but also pieces of hard, or that some do not understand or doubt during the operation, the following, as we briefly introduce the relevant principles of operation and use peanut oil

The Man Behind American Gangster:The Story Of Frank Lucas

2825 words - 12 pages of Frank’s success as a dealer and as a businessman. But what about Frank Lucas before he was a famous drug dealer? How did he get to where he was and where is Frank Lucas now? This paper will share with you Frank Lucas, behind the silver screen. It will research what the film didn’t show, and find anything which may be misleading about the film itself. Frank Lucas was born September 9, 1930 in La Grange, North Carolina. Shortly after his birth

The End of Work - the Decline of the Global Labor Force and the Dawn of the Post-Market Era

2625 words - 11 pages United States.” (p.33) Unfortunately, government will not be the place in which job growth will occur. On the contrary, it is likely to dramatically decline due to increased deficits and an astronomical rise in the debt at all levels of government, which has focused strong attention on the need to cut spending. Rifkin sights Frederick W. Taylor and his principles of “scientific management” several times in the book for which he attributes the

End of Life and the Ethics Behind It

1310 words - 6 pages End of Life and the Ethics behind It PHI208: Ethics and Moral Reasoning Instructor:  Jordan Seidel April 21, 2014 Do people have a right to end their lives whenever they choose to?  Ethically I would be inclined to say no, however there are some circumstances where I believe that it should be allowed. Assisted suicide should be allowed for the terminally ill and those that are suffering unnecessarily, even though it goes against what

Defend the Asset/Liability Approach of Accounting for Inter-Period Income Tax Allocation

656 words - 3 pages for depreciation. 5. Because the tax expense results from changes in balance sheet values, its measurement is consistent with the SFAC No. 6 and SFAS No. 130 definitions of comprehensive income. Others may include: - Under the International Accounting Standards No. 12 “Accounting for Taxes on Income” only the liability method is allowed. - If, after being established, and before reversal, the statutory tax rate for those years

Related Papers

The Fertility Decline In Latin Essay

346 words - 2 pages Fertility decline among young Latinas are largely due to the assimilation into American lifestyle, values and attitudes concerning cost of childbearing, which become the means that illustrate the general theory of fertility transition among young Latinas. Research shows that American-born Latinas have a much lower fertility rate than that of immigrant Latinas in the state of California. Organizations like Planned Parenthood note that Latinas

Decline Of The Roman Empire Essay

540 words - 3 pages Decline of the Roman Empire Rome wasn't built in a day, it took hundreds of years to expand it's empire. Rome's success was due to the fact of the character of it's people and the quality of their statesmanship (pg. 125). It took hundreds of years for The Roman Empire to collapse. The Roman Empire didn't fall because of any single reason. It fell, because of a chain reaction similar to the domino effect. When the character of it's people

Decline Of The American Family Essay

1363 words - 6 pages . But maybe a family could be made of multiple partners; as an example in Judith Stacey’s book with the three gay partners living together. Maybe it could even be a live-in relationship where the partners are not married, as opposed to popular belief. The word family is not restricted to only these instances and can be illustrated in various other ways without a set structure or definition. In the article “American Family Decline”, Popenoe argues

Decline Of The American Empire Essay

4873 words - 20 pages differences. Conservatives, firmly in control of the Congress, are emphasising American achievements - winning the Cold War and the success of capitalism - while they attempt to reconstruct the country along the traditional principles of individual responsibility and minimal government. While liberal critics attempt to draw attention to the legacy of problems - debt, social and educational decay, decline of the middle class, erosion of America's