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Cited by 312Labor market dynamics and wage inequalityEconomic Theory and PolicyIncome, Poverty, and Inequality

Measuring Labor's Share

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Krueger, Alan B·1999·American Economic Review
DOI 10.1257/aer.89.2.45
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Abstract

This paper considers conceptual and practical issues that arise in measuring labor's share of national income. Most importantly: How are workers defined? How is compensation defined? The current definition of labor compensation used the Bureau of Economic Analysis (BEA) includes the salary of business owners and payments to retired workers in labor compensation. An alternative series to the BEA's standard series is presented. In addition, a simple method for decomposing labor compensation into a component due to raw labor' and a component due to human capital is presented. Raw labor's share of national income is estimated using Census and CPS data. The share of national income attributable to raw labor increased from 9.6 percent to 13 percent between 1939 and 1959, remained at 12-13 percent between 1959 and 1979, and fell to 5 percent by 1996.

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  • The unadjusted use of employees' compensation may bias labor share over time by excluding the self-employment issue.

    “Although there are different types of measurement techniques in the empirical literaturefoot_5 , the major drawback of this traditional method depends on the fact that the unadjusted use of employees' compensation may bias over time by excluding the self-employment issue (Krueger, 1999;Gollin, 2002).”

    From Financialization and the Labor Share of Income (2019) · cites this paper as Krueger, 1999

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Research works printed but not linked: 13

  1. Abraham, Katharine; Spletzer, James and Stewart, Jay. "Why Do Wage Series Tell Different Stories?" Forthcoming, American Economic Review, May 1999 (Papers and Proceedings), 89(2).
  2. Atkinson, Anthony. The Economics of Inequality. Oxford, England: Clarendon Press, 1983.
  3. Bosworth, Barry and Perry, George. "Productivity and Real Wages: Is There a Puzzle?" Brookings Papers on Economic Activity, 1994, (1), pp. 317-43.
  4. Card, David, and Krueger, Alan. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States." Journal of Political Economy, February 1992, 100(1), pp. 1-40.
  5. Jaeger, David. "Reconciling Educational Attainment Questions in the CPS and Census.' Monthly Labor Review, August 1997, 121(8), pp. 36-40.
  6. Johnson, D. Gale. "The Functional Distribution of Income in the United States, 1850-1952." The Review of Economics and Statistics, May 1954, 35(2), pp. 175-82.
  7. Keynes, John M. "Relative Movements in Real Wages and Output." Economic Journal, March 1939, 49, pp. 917-49.
  8. Kravis, Irving. "Relative Income Shares in Fact and Theory." American Economic Review, December 1959, 49(5), pp. 917-49.
  9. Lettau, Michael; Loewenstein, Mark, and Cushner, Aaron. "Explaining the Differential Growth Rates of the ECI and ECEC." Compensation and Working Conditions, Summer 1997, 2(2), pp. 3-14.
  10. Phillips, Joseph. "Labor's Share and 'Wage Parity'." Review of Economics and Statistics, May 1960, 42(2), pp. 164-174.
  11. Solow, Robert. "A Skeptical Note on the Constancy of Relative Shares." American Economic Review, September 1958, 48(4), pp. 618-31.
  12. Stone, Nahum. "The Beginnings of the National Bureau of Economic Research," Twenty-fifth Annual Report of the National Bureau of Economic Research, 1945, pp. 5-10.
  13. Welch, Finis. "Linear Synthesis of Skill Distribution." Journal of Human Resources, Summer 1960, 4(3), pp. 311-27.

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Authors
Krueger, A. B.
Affiliations
Princeton University (US)
Corresponding author
Krueger, Alan B
Venue
American Economic Review
Publisher
American Economic Association
Published
1999-05-01
Volume
89
Issue
2
Pages
45-51
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/aer.89.2.45
OpenAlex
W2009871550
Cited by
312
References
1
Citations by year
2026: 8 · 2025: 10 · 2024: 8 · 2023: 8 · 2022: 11 · 2021: 13 · 2020: 18 · 2019: 17 · 2018: 9 · 2017: 10 · 2016: 8 · 2015: 24 · 2014: 10 · 2013: 17 · 2012: 17
FWCI
11.06
Type
journal article
Language
en
Open access
Locations
  • American Economic Review (publishedVersion)
  • National Bureau of Economic Research (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • SSRN Electronic Journal (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
  • Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
Keywords
labor share of national income, labor compensation, human capital, retirees, Bureau of Economic Analysis

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