The Distribution of Nonagricultural Labor Incomes in Communist and Capitalist Nations

Abstract

In the economic literature one finds a plethora of propositions about the macro-economic determinants of the distribution of labor incomes. One of the theories is that as the level of economic development rises, labor incomes are bound to become more equalized. Another view is that the larger the nation, the greater will be the separation of labor markets and the greater the inequality of labor income. Unfortunately there is relatively little speculation in the West about the impact of the economic system on the distribution of labor incomes, and those propositions that can be found are quite contradictory. Some have argued that labor incomes should become more equal under socialism because of the more equal distribution of education and because the government is able to reduce the power of noncompeting labor groups to raise their incomes far above those of the average workers. Others have suggested that the government's power to manipulate wages between industrial sectors and branches in order to attract workers to priority sectors could lead to greater inequalities in labor incomes. Since all of these arguments are based on what a socialist government “could” or “should” do, rather than what they actually are doing, their validity can be established only through empirical investigation.