Statistics on labour income and inequality
What is labour income and why does it matter?
Labour income is the amount that employed people earn by working. Economists use this concept to distinguish it from capital income. Owners of assets earn capital income due to their property. Assets include land, machines, buildings or patents. Labour income includes the wages of employees and part of the income of the self-employed. Self-employed workers earn from both their work and capital ownership.
Labour income data is key to understanding inequality. In 2018, 58% of adults worldwide were employed. So labour income shapes the lives of 3.3 billion workers and their families. Moreover, for many, their work is a key source of income. In contrast, studies show that capital income disproportionately benefits the affluent. Therefore, labour income data can bring new insights to understanding inequality. Furthermore, topics like automation, the gig economy, or globalisation have a strong link with labour income statistics.
Official statistics on labour income
The Sustainable Development Goals include the labour share as an indicator. The labour share measures how much of the total income accrues to labour. Hence, the labour share is a key inequality measure. But the labour share is just the first step to know who benefits from growth and who might be left behind. Recently, the ILO Global Commission on the Future of Work encouraged the development of distributional indicators.The commission recommended: “New measures of country progress also need to be developed to account for the distributional dimensions of growth”.
The ILO Department of Statistics is pleased to announce the publication of the first ever international labour income share and distribution estimates. The Labour Income Share and Distribution dataset dataset covers 189 countries. Moreover, the data include global and regional aggregates.
How is income distributed worldwide?
The global labour income share was 51.4% in 2017. Hence, 51.4% of the total global income was earned by working. Consequently, 48.6% of income went to capital owners. Importantly, the capital share has increased in the last years. Nonetheless, the majority of global income is still labour income. But how is this income distributed? Very unevenly: the top 10% earns 48.9% of it. Yet, the bottom 50% earns just 6.4%.
The global labour income distribution
The global labour income share and distribution
This article explains in detail the methodology and reviews the related literature. The paper analyses two key issues in producing the estimates. First, accounting for the labour income of the self-employed. Second, measuring the distribution of employee earnings with household surveys.
Finally, the paper analyses key results. Did you know that poorer countries tend to have higher inequality?