Lecture 10-Income distribution II.pdf

Lecture 10-Income distribution II.pdf - 30-Jan-18...

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30-Jan-18 1 MACROECONOMICS LECTURE 10 INCOME DISTRIBUTION II CONTENTS OF THE LECTURE 1. Functional vs personal income distribution 2. The wage share 3. Some data for the wage share 4. Why has the wage share declined over the last decades? CONTENTS OF THE LECTURE 1. Functional vs personal income distribution 2. The wage share 3. Some data for the wage share 4. Why has the wage share declined over the last decades?
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30-Jan-18 2 1. FUNCTIONAL VS PERSONAL INCOME DISTRIBUTION In the previous lecture emphasis was placed on personal income distribution. Personal income distribution refers to the distribution of income between the individuals of the society. There is another type of income distribution: the functional income distribution. Functional income distribution refers to the distribution of income between the factors of production. Since capital and labour are the main factors of production, functional income distribution can be viewed as the distribution of income between profits and wages. 4 CONTENTS OF THE LECTURE 1. Functional vs personal income distribution 2. The wage share 3. Some data for the wage share 4. Why has the wage share declined over the last decades? 2. THE WAGE SHARE Suppose an economy that produces 10 laptops and the price of each laptop is $10 . The real GDP ( Y ) refers to the number of laptops. Hence, it is equal to 10 . The nominal GDP ( $Y ) is equal to the price of laptops times the number of laptops.
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