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DOI: 10.5445/IR/1000075512

Declining labor-labor exchange rates as a cause of inequality growth

Tangian, Andranik S.

The current trends in the capital/labor split and the impacts thereof on the growth of inequality are one of the main concerns of national governments, European Commission and international organizations like UN, ILO, IMF, OECD and WB. These trends are usually studied at the macro level of functional distribution of income, that is, among capital and labor, and less with regard to productivity, remuneration policies or some other particular factors. In this paper, we contribute to the studies of the second type, explaining the decreasing labor income share in terms of unpaid working time and underpaid hourly earnings. For this purpose, we refer to the decreasing labor–labor exchange rate, i.e. devaluation of one’s labor in exchange for other’s labor embodied in the commodities affordable for one’s earnings. We show that the productivity growth allows employers to compensate workers with always a lower labor equivalent, i.e. increasingly underpay works, maintaining however an impression of fair pay due to an increasing purchasing power of earnings. This conclusion is based on the OECD 1990–2014 data for G7 countries (Canada, France, ... mehr

Zugehörige Institution(en) am KIT Institut für Volkswirtschaftslehre (ECON)
Publikationstyp Forschungsbericht
Jahr 2017
Sprache Englisch
Identifikator ISSN: 2190-9806
URN: urn:nbn:de:swb:90-755124
KITopen ID: 1000075512
Verlag KIT, Karlsruhe
Umfang 47 S.
Serie Working paper series in economics ; 104
Schlagworte Inequality, productivity, hourly earnings, consumer prices, housing prices, labor-labor exchange rate
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