Some observations on the long term evolution of the distribution of income:
- since the transition from fordist growth regime to neoliberalism around 1980 there is a substantial change in primary distribution of income towards a growing share of capital income with respect to labour income (wages), from an adjusted wage share of 70 – 75 % in Western Europe in 1980 to 60 – 65 % in 2015, a loss of almost 10% of GDP.
- while in 1980 almost all of capital income corresponded to a similar share of gross investment, in 2012 there is a share of capital income corresponding to 10 – 15 % of GDP with is not invested in the national economy. More share of capital income does not lead to more investment, both are rather independent of each other.
- while inequality has been decreasing from 1960 to 1980, there is a strong increase in income inequality. The upper 10% of the population in 2010 receives 32 to 40% of disposable income and the upper 1% have a share of 9 to 15%.
- A simple calculation example allows for estimating the order of magnitude of available margins for redistribution: Limiting the medium income of only the group of the upper 1% to four times the average income by redistributive political measures such as more progressive taxes would lead to a potential for redistribution of 5 – 11% of total disposable income.
For very detailed and actual data on worldwide inequality see the World Inequality Report 2022 of the World Inequality Data Base.
Evolution of the adjusted wage share in some European countries (source: AMECO database, zamheifa 2024)
Evolution of share of income (in percent) of the upper 10% of the population (source: WID database, zamheifa 2016)
Evolution of share of income (in percent) of the upper 1% and 0,1% of the population (source: WID database, zamheifa 2016)