Adjusting for self-employed income in emerging markets’ labor share: Evidence from Ecuador

Abstract:

There is a broad consensus that the labor share has declined during the last decades in both developed and developing countries (Dao, 2018; Rodriguez & Jayadev, 2010; Elsby et al., 2013; Karabarbounis & Neiman, 2014). However, the available evidence is far from conclusive, since there are important measurement challenges, particularly for developing countries. This has important implications as shown for instance by Mućk et al.(2018), who argue that the medium-run swings and long-run trends of labor share are significantly affected depending on how it is measured. Considering the methodological challenges of measuring the labor share (Mućk et al., 2018; Guerriero, 2019; ILO Department of Statistics, 2019) we ask:“How has the labor share evolved in Ecuador between 2001 and 2018?”. To answer this question we conduct a broad-based comparison of the labor share evolution in Ecuador based on different measures at the macro (National Accounts) and micro levels (Firms balance sheets records, labor surveys and administrative tax data), and propose an adjustment to survey data measurements based on the Heckman selection bias correction (Heckman, 1979) and Mincerian wage quations (Mincer & Polachek, 1974). This proposal fits with the IDB’s questions regarding methodological contributions that propose methods to deal with the high share of self-employed workers in the region when discussing the functional distribution of income, and the analysis of the labor share at the subnational, sectoral or firm level.

Año de publicación:

2019

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Fuente:

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