BOWLEY'S LAW: THE DIFFUSION OF AN EMPIRICAL SUPPOSITION INTO ECONOMIC THEORY

The share of labour income in national product has declined in many advanced economies over the past 30 years or so. However, many economists are still convinced that the wage share remains more or less constant in the long run. This notion of the long-term relative stability of the wage share is co...

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Published inCahiers d'économie politique (Amiens) Vol. 61; no. 61; pp. 19 - 49
Main Author Krämer, Hagen M.
Format Journal Article
LanguageEnglish
Published Paris L'Harmattan 01.01.2011
Les Editions Hermann
SeriesCahiers d’économie politique / Papers in Political Economy
Subjects
20th century
Aggregate Factor Income Distribution. Wage share. Bowley’s Law. Macroeconomic income distribution theories
Compensation
Economic development
Economic growth theories
Economic theory
Economics
Economists
Employees
Income distribution
Income shares
Macroeconomics
National income
Neoclassical economics
Self employment
Studies
Wages
Wages & salaries
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Summary:The share of labour income in national product has declined in many advanced economies over the past 30 years or so. However, many economists are still convinced that the wage share remains more or less constant in the long run. This notion of the long-term relative stability of the wage share is considered to be a stylized fact, or even sometimes referred to as a "law of economics". This paper attempts to show how the alleged stability of the labour share of income became known as one of the "great magnitudes in economies". It also shows how this "law" made its way into the three major theories of macroeconomic income distribution, i.e. neoclassical, post-Keynesian, and Kaleckian distribution theory. Since the data actually reveal strong fluctuations of aggregate income shares over time, the conclusion has to be drawn that the major macroeconomic theories of growth and distribution are built around an invalid -or at least highly questionable- assumption about the real world. La part du revenu du travail dans le produit national a baissé dans de nombreux pays développés au cours des trente dernières années. Cependant, nombreux sont les économistes qui demeurent convaincus que la part des salaires reste plus ou moins constante à long terme. La stabilité relative de la part des salaires à long terme est considérée comme un fait stylisé, voire comme une « loi de l'économie ». L'article tente de montrer comment la stabilité alléguée de la part du travail dans le revenu est devenue l'une des « caractéristiques centrales de la science économique ». Il montre aussi comment cette « loi » a pénétré les trois principales théories macro-économiques de la répartition : néoclassique, post-keynésienne et kaleckienne. Puisque les données révèlent des fluctuations marquées dans le temps des parts des revenus, on peut en conclure que les principales théories macro-économiques de la croissance et de la répartition sont construites autour d'une hypothèse erronée — ou très discutable.
ISSN:0154-8344
1969-6779