Functional Income Distribution and Its Role in Explaining Inequality

34 Pages Posted: 3 Feb 2016

See all articles by Maura Francese

Maura Francese

Bank of Italy

Carlos Mulas-Granados

Government of the Kingdom of Spain - Economic Bureau of the President

Date Written: November 2015

Abstract

This paper is motivated by two parallel trends: the declining labor share of income and increasing inequality. Micro and macroeconomic data, covering up to 93 countries between 1970 and 2013, are used to assess whether the declining labor share of income has been a key factor driving growing inequality. The major conclusion is that changes in income inequality across a wide range of countries have been driven significantly by changes in the inequality of wages, while the distribution of income between labor and capital has not been a major factor.

Keywords: inequality, distribution, factor income distribution, wage share, income, gini index, income inequality, labor income, Personal Income and Wealth Distribution, General, All Countries,

JEL Classification: D33, J30, D31

Suggested Citation

Francese, Maura and Mulas-Granados, Carlos, Functional Income Distribution and Its Role in Explaining Inequality (November 2015). Available at SSRN: https://ssrn.com/abstract=2727209 or http://dx.doi.org/10.2139/ssrn.2727209

Maura Francese (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Carlos Mulas-Granados

Government of the Kingdom of Spain - Economic Bureau of the President ( email )

28071 Madrid
Spain

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