Share Of National Income Research Articles

The Evaluation of the Changes in the Agricultural Sector with Common Economic Indicators in Turkey during the Last Decade

Agriculture is an important sector in the Turkish Economy in terms of population and employment, nutrition, agricultural production, domestic consumption, its contribution to industry, national income and balance of payments. By current economic indicators in Turkey, while its share in national income is 9.0%, its share in employment is 23.6%. Although the share of agriculture in GDP decreased in Turkey in the last decade, the rate of growth of agricultural sector increased. Whereas cultivated fields and the number of livestock declined, vegetative production and animal production increased significantly. Moreover, the rate of total employment increased, but the rate of agricultural employment decreased. In addition, the use of machine in agriculture increased and the wage of employees in agriculture increased considerably, as well. On the other hand, agricultural support policies in the last decade witnessed major reforms and important support policies were implemented in many areas. In 2013, the share of agricultural subsidies in gross domestic product increased compared to the previous year and an increase in the 2014 budget was targeted. In this study, agriculture-related indicators in Turkey in the last ten years will be evaluated and the last ten-year change and the reasons of this change will be examined. In the light of these changes, agricultural recommendations in terms of future oriented agricultural plans and programs will be presented. DOI: 10.5901/mjss.2015.v6n2s1p588

Economic structure and factor payments

There is a growing body of evidence that the labour payment share in national income varies across countries and over time, suggesting that the popular aggregate Cobb–Douglas production function may not capture income share dynamics. There remains conflicting evidence on the importance of natural resource rents among low income economies and on estimates of the rate of return to produced capital. This paper focuses on the structural differences among countries, confirming the importance of the agriculture sector in estimates of labour and land’s share of factor income based on 81 countries at diverse levels of economic development in the year 2005. I find that cross-country data are best modelled by a CES production function with an elasticity of substitution of 0.8 and that many low income countries have a higher return to capital than the United States.

Taxable Corporate Profits

AbstractRevenues from corporate income taxes have remained relatively stable as a share of national income over the last three decades despite reductions in corporate tax rates and increased opportunities for multinational tax avoidance. This is largely explained by an increase in the share of corporate profits in national income. In this paper, we discuss the sources of corporate profits, and specifically corporate taxable profits; these include a normal return to capital investment, returns to labour or entrepreneurial effort that are realised as dividends or capital gains, and returns to market power. We relate these components of profits to the ways that corporate taxes can change incentives to invest or exert effort, and we discuss some implications for policy.

A U-Turn on the Road to Serfdom

There is a growing coalition of people in the US who hold a strong view that they would like the government to ‘leave us alone’. The coalition includes home-schoolers, those who run small businesses and taxpayers. These groups do not want special favours from government and their priorities are very different from each other. However, the coalition is united in its desire for the government not to interfere in their lives. There is a coalition opposed to the ‘leave us alone’ coalition. This is the ‘takings coalition’ that views the proper role of government as taking money from others and giving it to them. All tax increases feed the ‘takings coalition’ and increase its strength and appetite. However, if taxes cannot be increased, the interest groups that wish to increase spending on their own favourite causes will only be able to do so if spending is decreased on other programmes – choices will have to be made and the ‘takings coalition’ will become fractious. Because there is a significant degree of fiscal decentralisation in the US, the states can lead the way in reducing government spending, taxation and regulation. In the US, states can copy each other’s successful policies. States are, in a sense, in competition with each other. Those that follow policies that discourage business will see an exodus to states that have lower taxes and regulatory burdens. This is already happening. Currently, a majority of people live in states that have governors and legislatures that would be sympathetic to an agenda of lower taxation and less regulation. This provides reason for optimism. At the federal level, the Ryan budget plan provides hope that there will be a significant reduction in government spending compared with current projections. The plan would lead to lower and simpler taxes and the decentralisation of responsibility for welfare programmes. Ponzi Medicare and pensions schemes would be replaced by funded, individually controlled, defined contribution plans. If nothing changes in the US, spending at the federal level alone will increase to around 40 per cent of GDP from around 20 per cent today. The Ryan budget plan would bring the spending ratio back down to below 20 per cent. In order to maintain – and increase – momentum towards a free economy, we need to create favourable demographic trends. This can be done through radical reforms that give families control over education, pensions and welfare. When such reforms are carried out, those affected will tend to support economic policies that involve a less substantial role for the state. Detailed analysis of government spending around the world shows that there have been very rapid increases in the share of national income taken by the government. Since Ronald Reagan’s election as president in 1980, the proportion of national income spent by the US government at various levels has increased by around one third to 40 per cent. This increase will have had a significant impact on economic growth. Indeed, if government spending had remained at the same proportion of national income as in 1960, the evidence suggests that national income in the US would now be around 70 per cent higher than its current level. There are differences between European countries and the US. In particular, the UK has a very centralised fiscal system that does not provide the same opportunities for competition as the US federal system. However, there are similarities between Europe and the US when it comes to the dynamics of reform. There are a number of examples in Europe – for example, in health and education reform in Scandinavia – of reform leading to interest groups developing that are averse to reversing policy changes and, indeed, that promote further radical policy change.

Do Labour Laws Increase Equality at the Expense of Higher Unemployment? The Experience of Six OECD Countries, 1970-2010

Using longitudinal data on labour law in France, Germany, Japan, Sweden, the UK and the USA for the four decades after 1970, we estimate the impact of labour regulation on unemployment and equality, using labour's share of national income as a proxy for the latter. We employ a dynamic panel data analysis which distinguishes between short-run and long-run effects of legal change. We find that worker-protective labour laws in general have no consistent relationship to unemployment but are positively correlated with equality. Laws relating to working time and employee representation are found to have beneficial impacts on both efficiency and distribution.

Workers’ Share of National Income: Labor Pains

Workers’ Share of National Income: Labor Pains

The distribution of income between labor and capital is not stable: But why is that so and why does it matter?

I review the literature on labor's share of national income in developed and developing countries. These shares have varied systematically over the post-World War II period, rising until the late 1970s and then falling until now. Explanations for the decline in labor's share include technical progress, globalization and a decline in labor's bargaining power, but none of these explanations can account for both the rise and the decline of labor shares over time and for the similar pattern in developed and developing countries. However, movements in oil prices can account for these movements if energy is included in the production function. Such an explanation has broad implications for income distribution, energy conservation and for the modern theory of growth.

Slicing the Pie

In this article, I underline a less commonly acknowledged outcome of the neoliberal revolution. Following the shift from social protection to economic liberalism, in many rich countries workers' share of national income has declined and capitalists' share has increased. To better understand this link between neoliberalism and workers' share of national income, I develop a new political economy approach that stresses the importance of state policy, class organization, and organizational unity for determining how national income is distributed between workers and capitalists. I apply this conceptualization to the dynamics of labor's share in Israel, once a socialist economy with little inequality, which today has become one of the world's most unequal. A detailed account of three stages in the Israeli political economy characterized by distinct inequality outcomes and time-series equations estimating the changes in labor's share from 1955 to 2005 reveal that market-oriented state policies, workers' disorganization, and the growing fragmentation within organized labor led to a decline in labor's share during the current stage of liberal capitalism.

Quantitative evidence of Goodwin's non-linear growth cycles

The article searches for quantitative evidence in favor of an extended version of Goodwins predator-prey model of endogenous distribution-employment cycles for 16 countries. The model is extended to include several harmonics in the workers' share of national income and the employment rate. The model fits all the observations both within sample and out of sample for half of the countries, with a 10% error, and for 4 countries with a 5% error. This suggests that the model may be useful to investigate the behavior of dynamical economic systems.

Development aid, Openness to Trade and Economic Growth in Least Developed Countries: Bootstrap Panel Granger Causality Analysis

This study examines causal relations among development aid, openness to trade and economic growth in the Least Developed Countries (LDC), for the period between 1970 and 2010. The variables under scrutiny are real per capita GDP, openness to trad e ratio and total net Official Development Assistance as share of national income. By making use of a new Granger causality testing approach properly taking into account cross-sectional dependence and heterogeneity issues, this paper finds no significant causality relation among foreign aid, openness to trade, and economic growth in a panel of African LDCs.

Is the Federal Debt Raising Corporate Profits and Reducing Labor's Share of National Income?

The federal debt-to-GDP ratio has accelerated in recent years to levels unseen in the U.S. since the post- World War II decline. At the same time, the profit share of national income is at post-war highs and the employee compensation share of national income is at 40-year lows. The empirical evidence in this paper suggests that these facts are related. The paper provides evidence that government debt has crowded out business investment, which has led to a rising profit share and declining employee compensation share of income. This result suggests that the federal debt is contributing to income inequality. On the other hand, to the extent that the rise in profit share can be traced to economic fundamentals, it is likely to be more persistent than the rise in the mid-2000s, which was boosted by illusory profits in the financial sector.

Exploring the interaction between intellectual property rights, human capital and R&D expenditures: are there implications for developing countries?

An extensive literature studies the consequences of intellectual property rights (IPRs) for economies in various stages of development. Surprisingly, few studies or none at all focus on how IPRs determine the effects of human capital accumulation (via educational attainment) on research and development (R&D) expenditures. The authors propose a simple framework that is consistent with an intuitive stylised fact that appears in the data, namely that countries with poor intellectual-property protection may accumulate human capital without experiencing a corresponding increase in R&D as a share of national income. The model predicts that without minimum intellectual-property protection, additional education may result in more imitation rather than innovation. Additionally, the model implies that human capital and intellectual property rights are substitutable incentives for skilled labour to participate in R&D. The preponderance of the evidence suggests that interactions between human capital and IPRs determine global patterns of R&D, and intellectual property rights tend to raise the effect of educational attainment on the incidence of R&D.

Iceland's rise, fall, stabilisation and beyond

Iceland is an unusually pure example of the dynamics that blocked regulation and caused financial fragility across the developed world for 20 years. This essay describes the statist-and-corporatist political economy of the country as it soared from near the bottom of the Western European income hierarchy at the end of the World War II to up near the top by the 1980s. It illustrates how a group of neoliberal politicians and allied civil servants drove through selective deregulation and privatisation in the 1990s and 2000s. In the space created for newly privatised banks, Icelandic financiers grew the banks and linked private equity firms through mergers and acquisitions abroad to the point where by 2007 tiny Iceland supported three banks in the world’s biggest 300 banks, with assets eight times the GDP—second highest in the world after Switzerland. As profits from these overseas operations were partly redistributed back to Iceland the economy boomed, in the grip of super-Minsky processes. The government, the banks and the media interpreted the boom as testimony to the validity of neoliberal policies and went out of their way to hide increasing financial fragility from view, preventing a negative or self-correcting policy feedback loop. The accident waiting to happen happened in the wake of the Lehman collapse in September 2008. The essay charts the zigzags of the government’s response and the citizens’ response, and discusses the prospects for a resumption of growth on a more sustainable basis. It suggests that Iceland illustrates in miniature the ratcheting down of mass living standards underway across the Western world now that the cushion of debt has been removed, even as financiers and others in the top few percentiles of national income distributions increase their share of national income. But economic institutions and politics matter: in Iceland the large devaluation spread the cut in a relatively ‘apolitical’ way; the government let the banks go bust rather than bail them out at taxpayers’ expense; it imposed capital controls on outflows; and it used fiscal transfers to protect the bottom half of the population from disproportionate cuts.

A Generalized Fact and Model of Long-Run Economic Growth: Kaldor Fact as a Special Case

This paper provides new evidence on the long-run relationship between economic growth and labor's share in national income, based on a comprehensive panel data set for 123 countries from 1950 to 2004. Xie's primary finding is that labor's share follows a cubic relationship with real GDP per capita over the long process of development. At the beginning of the modern economic growth process, the share of labor in national income first decreases until an initial threshold is reached. After that, labor's share keeps increasing until the country's GDP per capita reaches a second threshold before falling again. Xie argues that these dynamics apply not only to the less developed countries in the postwar years, but also to the advanced countries like the United States and the United Kingdom during their early economic take-offs, starting in the late 18th and 19th century, respectively. Finally, he proposes a two-sector constant elasticity of substitution (CES)-type growth model and simulate the model to replicate and explain the possible mechanism behind such a nonlinear pattern of movements in labor's share.

Tanzanian SMEs’ Perceptions towards Adoption of Supply Chain Management (SCM) Strategy

Although a number of Small and Medium Enterprises (SME) in Tanzania economy is high, their share innational income is significantly low due to lack of efficiency. The choice to implement supply chain and supplychain management by SMEs will lower costs and increase efficiency, which will eventually help in loweringcosts and increase gains to both SMEs and the country.In this research we have compared the differences in perceptions of small and medium-sized enterprises againstlarge enterprises. The methodology, employed was cross-sectional survey of Tanzanian enterprises engaged inagricultural processing. The findings clearly show that SMEs give less attention to supply chain managementstrategies, also reluctant to employ transparent integrated system to link them with other actors in the chain.Absence of compatible organization structures in SMEs is seen as a major obstacle for complete implementationof integration strategy.

Reconstructing labor income shares in Argentina, Brazil and Mexico, 1870-2000

AbstractThe labor income share in national income is a good indicator of the extent to which the working classes are able to reap the fruits of economic growth or, conversely, bear the burden of economic stagnation. This paper aims to reconstruct the labor income share of Argentina, Brazil and Mexico in a three-sector framework, including the rural, the urban formal and the urban informal sectors. We find that in all three countries the share of labor earnings peaked in the middle of the 20thcentury. Fluctuations in the Brazilian and Mexican labor income shares were large, with a sharp decline in the post-1961 and post-1976 periods, respectively. In Argentina, the labor income shares tended to be more constant at levels around 50 per cent, testifying to a more stable and egalitarian distribution of income.

The factor income distribution in China: 1978–2007

This paper investigates changes in aggregate labor share in China during 1978 and 2007 with a particular focus on the 1995–2007 period during which official statistics report a drop of 12.45 percentage points in labor's share of national income (labor share). Our main findings are: (1) The reported fall in aggregate labor share is overstated. According to the official statistics released by the NBS (2007a), the labor share fell 5.25 percentage points from 2003 to 2004. However this dramatic decline, 42.16% of the total reported decline of the labor share from 1995 to 2007, is completely due to the changes in the way NBS break down the operating surplus state-owned and collective-owned farms and the mixed income of the owners of individual economy; (2) For the last three decades, two main forces have been driving shifts in the aggregate labor share: (i) structural transformation between the agriculture and non-agriculture sectors and (ii) shifts in the labor share within the industry sector; (3) From 1995 to 2003, these two effects are both negative and together drive down aggregate labor share by 5.48 percentage points. The structural change explains 61.31% of the decline and the remaining 38.69% of the decline is due to the changes in the labor share within sectors, primarily in the industry sector; (4) Labor share in agriculture is lower than labor share in services. Therefore, when the service sector grows relative to the agriculture sector in the economy, the aggregate labor share of income declines; and (5) Restructuring of the SOEs and expanded monopoly power are the main reasons for the decline of labor share within industry after 1998. Relative price shifts, the factor input ratio, and biased technological progress are all insignificant forces for this decline because the substitution between factors in the industry sector is nearly unit elastic.

Economic insecurity in the new wave of globalization: offshoring and the labor share under varieties of capitalism

Countries subject to the same degree of exposure to globalization may experience very different levels of economic insecurity depending on social support or employment protections provided by the state or even due to insurance obtained by households. We identify five varieties of industrialized countries, characterized by national levels of ‘labor support’ and ‘strictness of employment protection,’ and analyze the importance of the role of the state in mediating the impact of globalization on economic security by estimating the relation between offshoring and the labor share of income across the OECD. We find that the effect of offshoring varies across countries depending on their regulatory structure and in particular on the degree of labor market support provided by governments. Regression analysis shows that for the countries providing ‘more support’, offshoring has a less unfavorable or more favorable effect on the labor share of national income.

Capital Markets Integration and Labor Market Institutions

A major development in recent decades in industrialized countries is the decline in national savings rates. Over the same period, in many countries the labor's share of national income has declined and liberalizing labor market reforms have been implemented. This paper seeks to provide a unified account of these developments. We show that globalization, in the form of increased capital mobility, provides incentives to implement labor market reforms that raise the returns to capital and improve efficiency. Nevertheless, in a world where aggregate savings reflect life-cycle motives and are mainly performed out of labor income, the associated fall in the labor share reduces aggregate savings and the pace of capital accumulation.

Intellectual Property Rights, Human Capital and the Incidence of R&D Expenditures

Numerous studies predict that developing countries with low human capital may not benefit from the strengthening of intellectual property rights. The authors extend an influential theoretical framework to highlight the role of intellectual property rights in the process of innovation and structural change. The resulting theory is consistent with a stylized fact that appears in the data, namely that countries with poor intellectual-property protection may accumulate human capital without a corresponding increase in research and development investment as a share of national income. The model predicts that without minimum intellectual-property protection, additional education may result in more imitation rather than innovation. The preponderance of the econometric evidence presented in this paper suggests that interactions between human capital and intellectual property rights determine global patterns of research and development effort, and intellectual property rights tend to raise the effect of education on the incidence of research and development.