The Problem of Income Distribution Between Labor and Capital in the Modern World: XX and XXI Centuries

Abstract

This work is devoted to an attempt to quantify the trends in the distribution of income between labor and capital and assess their compliance with the development opportunities of the modern economy. Trends in the distribution of income between labor and capital were assessed by constructing econometric models of the share of labor compensation in national income and GDP. The resulting models with a high level of confidence showed that in the 20th century in the United States there was a tendency to redistribute income from capital to labor. The main trend in the distribution of income between labor and capital in the 21st century in most countries, including Russia, is the tendency to redistribute income from labor to capital. In countries with predominantly socially oriented economic policies, the main trend in the distribution of income between labor and capital is the tendency to redistribute income from capital to labor. The trend of redistribution of income from labor to capital indicates an undervaluation of human capital. This trend does not correspond to the development possibilities of a modern post-industrial economy and leads to a loss of competitiveness of countries in whose economies this trend is observed. The emerging trend of redistribution of income from labor to capital in modern Russia is the result of a liberal economic policy, does not correspond to the development opportunities of the modern economy and slows down economic growth, and under the conditions of sanctions from unfriendly countries, it threatens economic stagnation.