abstract: 'This paper examines whether the labour share (wage-productivity gap) is

  a major factor in the evolution of inequality and employment. To this

  end, we use annual data for the US, UK and Sweden over the past forty

  years and estimate country-specific systems of labour demand and Gini

  coefficient equations. Further to the statistical significance of our

  models, we validate their economic significance through counterfactual

  simulations. In particular, we evaluate the contributions of the labour

  share to the trajectories of inequality and employment during specific

  time intervals in the post-1990 years. We find that during the 1990s the

  cost of a one per cent increase in employment was in the range of 0.7

  per cent-0.9 per cent higher inequality in all three countries. However,

  in the 2000s, whereas the inequality-employment sensitivity ratio

  slightly fell in the US, it exceeded unity in the countries on the other

  side of the Atlantic. It obtained its highest value in the UK, where a 1

  per cent growth in employment was achieved at the expense of 1.3 per

  cent worsening in income inequality. We argue that the

  inequality-employment sensitivity ratio can be viewed as a barometer of

  socio-economic pressure, and thus the evolution of the wage-productivity

  gap and its impacts on the personal income distribution and labour

  demand deserve the attention of policy makers.'
affiliation: 'Karanassou, M (Corresponding Author), Univ London, Sch Econ \& Finance,
  Mile End Rd, London E1 4NS, England.

  Karanassou, Marika, Univ London, Sch Econ \& Finance, London E1 4NS, England.

  Sala, Hector, Univ Autonoma Barcelona, Dept Econ Aplicada, Bellaterra 08193, Spain.'
author: Karanassou, Marika and Sala, Hector
author-email: 'm.karanassou@qmul.ac.uk

  hector.sala@uab.es'
author_list:
- family: Karanassou
  given: Marika
- family: Sala
  given: Hector
da: '2023-09-28'
files: []
issn: 0012-9984
journal: ECONOMIC AND SOCIAL REVIEW
keywords-plus: INCOME-DISTRIBUTION; TOP INCOMES; UNEMPLOYMENT; FINANCIALISATION
language: English
month: FAL
number: '3'
number-of-cited-references: '46'
orcid-numbers: Sala, Hector/0000-0002-3043-2790
pages: 343-376
papis_id: d8713dbe0d92de712d4e9e814c2c3c1a
ref: Karanassou2012inequalityemployment
researcherid-numbers: Sala, Hector/K-6370-2017
times-cited: '3'
title: Inequality and Employment Sensitivities to the Falling Labour Share
type: Article
unique-id: WOS:000314269500002
usage-count-last-180-days: '0'
usage-count-since-2013: '13'
volume: '43'
web-of-science-categories: Economics; Sociology
year: '2012'