Income inequality: Global trends in labour share of GDP

Abstract

Recent trends in the labour share of income dynamics in high- and middle-income countries and the relationship between the amount of GDP paid out in wages, salaries and benefits and inequality in income distribution are examined in this article. The growing concern about the rising inequality due to COVID-19 worldwide explains the necessity of research in this field. To detect the trend, the autoregressive model is examined, which is estimated by the least squares dummy variable method for panel data A negative trend was revealed for countries with a high share of labor of output in the period of the 1990–2010s, which was replaced by a weak positive trend. At the same time, for several countries with a low share of labor in GDP, negative trends intensified after the global economic crisis. For the group of countries where compensation for labor costs averages from 42 to 56% of GDP, the hypothesis of a trend was not confirmed. Our results confirm the relevance of negative trends in the share of labor compensation of income caused by such common factors as technological change or globalization in the period 1990–2010 and point to divergent trends in the decade following the global crisis.