Income Inequality and Labor Share in U.S.A and Canada

Abstract

In recent years, in many countries, income inequality has increased while the labour share of income has declined. Using the Standardized World Income Inequality Database, we examine if income inequality, measured by the GINI Index, is related to the labor share of income in the U.S. and Canada. The paper uses time series regressions for the 1981-2011 period. Although apparently correlated, regression results confirm that declines in the labor income share have not had significant effects on income inequality.

Effect of Nafta on Mexico´s Wage Inequality

“…To measure wage inequality, several different indicators can be used such as relative wage disparity between qualified workers and non-qualified workers (Krueger, 1993;Juhn, Murphy and Pierce, 1993;Card and DiNardo, 2002), or the distribution between formal and informal workers (Marcouiller, de Castilla and Woodruff, 1997;Krstić and Sanfey, 2011;Kahyalar, et. al., 2018), the relative difference of wages between percentiles (Budría and Moro-Egido, 2008;Dustmann, Ludsteck and Schönberg, 2009;Antonczyk, Fitzenberger, and Sommerfeld, 2010;Tansel and Bodur, 2012), equations of salaries that try to identify variations in the performance of different education groups (Dolton, O'Neill and Sweetman, 1996;Card, 2001;Weichselbaumer and Winter-Ebmer, 2005;Blau and Kahn, 2017), a fixed inequality index like Gini or Thiel's index (Sala-i-Martin, 2006;Islam and Safavi, 2019;Yang and Cao, 2019), and the coefficients of variation (Katz, 1999;Lemieux, 2006), among other measurements that consider wellbeing in the distribution.…”