The second way of estimating GDP is to use "the sum of primary incomes distributed by resident producer units". If GDP is calculated this way it is sometimes called Gross Domestic Income (GDI), or GDP (I). GDI should provide the same amount as the expenditure method described later. (By definition, GDI = GDP. In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies.)
- 1/ "labor" number includes wages/salaries + benefits
- 2/ labor portion peaked in 1969
- 3/ wage/salaries portion peaked at same time; has dropped more than total labor portion, as bigger piece of that portion has become benefits (Payroll Tax contributions, Health Insurance).
- Economist and author Mark Warshawsky of George Mason University's Mercatus Center talks with EconTalk host Russ Roberts about his work on the role health care benefits play in measuring inequality. Using data from the Bureau of Labor Statistics, Warshawsky shows that because health care benefits are a larger share of compensation for lower-paid than higher-paid workers, measures of inequality and even measures of economic progress can be misleading or distorted. Includes a table.
- 4/ housing income has varied a lot over long period of time. Was particularly low during 1965-1990. So increase since then just brings it back to levels that were normal until 1965.
- The exact values of the labor and capital shares depend on the extent to which proprietors’ income counts as labor. However, despite some methodological differences, this examination of shares of GDI leads to the same conclusion as Bridgeman’s finding. Labor compensation has fallen somewhat as a share of net income since its peak in the 1970s, but it is within the historical range. Matthew Rognlie, using different methods, concludes that the increase in the capital share of net income comes entirely from the housing sector."
- Piketty is right: inequality of labor earnings – that is, the distribution of the labor share – is a much more fruitful ground for the study of inequality than examination of labor and capital shares. This belief is echoed by Rognlie: “Beyond housing, the results in this paper (if anything) tentatively suggest that concern about inequality should be shifted away from the split between capital and labor, and toward other aspects of distribution, such as the within-labor distribution of income.”