Why labor income shares seem to be constant?

The common assumptions that labor income share does not change over time or across countries and that factor income shares are equal to the elasticity of output with respect to factors have had important implications for economic theory. However, there are various theoretical reasons why the elasticity of output with respect to reproducible factors should be correlated with the stage of development. In particular, the behavior of international trade and capital flows and the existence of factor saving innovations imply such a correlation. If this correlation exists and if factor income shares are equal to the elasticity of output with respect to factors then the labor income share must be negatively correlated with the stage of development. We propose an explanation for why labor income share has no correlation with income per capita: the existence of a labor intensive sector which produces non tradable goods.

Etnic discrimination and income in San Andrés Island, Colombia

This document examines, bases on the analysis of observable characteristics, if an income gapexists between the raizal population and non raizal population of San Andres Island. For thispurpose, the information of the SISBEN II survey for the year 2004, compelled by the NationalPlanning Department (DNP, Spanish acronym) is used. The methodological strategy uses quantileregressions to determine the existence of pay gaps throughout the distribution of income. Theresults suggest that being raizal has a negative impact on income for the lower quantiles. However,this difference vanishes as income increases, becoming positive at higher levels.