An Empirical Study About the Relationship Between Labor Share and Spending Shares of National Income

Abstract

The main objective of the paper is to analyze and evaluate the relationship between labor share and spending shares of national Income globally. The labor share, also called the wage share, refers to the percent of economic output classified in the labor wage. Besides, the spending share of the national income is mainly focused on the portion of the amount of consumption, investment, government spending, exports, imports, or net exports in actual economic output. We conduct a correlation and regression analysis and conclude that all the spending shares are significantly associated with labor share. Some are positive (consumption, investment, imports), and some are negative (government spending, exports, and net exports).