This article appears in the following Oxford Review of Economic Policy issue: CAPITALISM AND INEQUALITY [View the issue table of contents]
Factor shares: the principal problem of political economy?
* Nuffield College, Oxford, e-mail: tony.atkinson{at}nuffield.ox.ac.uk
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Abstract |
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This paper identifies three reasons for studying factor shares: to make a link between incomes at the macroeconomic level (national accounts) and incomes at the level of the household; to help understand inequality in the personal distribution of income; and to address the concern of social justice with the fairness of different sources of income. In each case, I explore the implications and point to ways in which the analysis could be taken forward in a twenty-first-century treatment of the classical problem of political economy.
Key Words: factor shares • wages • profits • distribution
Helpful comments on earlier versions were provided by Wiemer Salverda, the referees, and participants in the September 2008 Workshop on Inequality, Politics and Unemployment that formed part of the Celebration of Andrew Glyn's Life and Work.
Although they would be less impressed to read that the methods adopted to measure value added in the financial services sector may have meant that half of the reported value added could have been illusory (Weale, 2009, p. 7).