Sunday, January 13, 2013

Labor Shares Around the World

A few weeks ago, Paul Krugman noted that the share of compensation in national income has declined over the last 40 years or so.  That is, labor (broadly defined as everyone who gets a wage or salary) is relatively getting less and capital is getting relatively more.   Thomas Edsall also wrote about the issue last week.  I wondered whether this was happening in other countries too.  Here are figures on labor share based on OECD data from 1975 until recently (between 2009 and 2011 depending on the country). 

                 Trend    1975    Latest
 1 UK          -.037    70.1%    70.7%
 2 US          -.099    68.3%    63.7%
 3 Canada      -.161    68.1%    59.7%
 4 Australia   -.172    66.9%    55.9%
 5 Germany     -.219    74.5%    68.3%
 6 Sweden      -.241    72.9%    63.5%
 7 France      -.350    75.4%    68.9%
 8 Japan       -.394    68.0%    59.4%
 9 Italy       -.494    82.6%    68.0%

 The "Trend" is the average change per year in that country.  For example, in the US, the average annual change is 0.1%, which means 3.5%-4% over 35 to 40 years.  The trend is negative in every nation, but its size varies greatly, and the decline in the United States is relatively small compared to other countries.  Looking at it another way, in 1975 the labor share in the US was eighth out of nine countries (just ahead of Canada); in the latest year the US ranked fifth.

PS:  I limited this to countries that were relatively affluent by world standards at the beginning of the period.  Labor share seems to fluctuate more from year to year in small countries, so I included only a few:  Canada and Australia because they are culturally similar, and Sweden because sociologists always like to compare the US and Sweden. 

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