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Measuring labor share for Poland – does heterogeneity of labor compensation matter?

Author

Listed:
  • Michał Gradzewicz

    (Narodowy Bank Polski)

  • Janusz Jabłonowski

    (Narodowy Bank Polski)

  • Michał Sasiela

    (Narodowy Bank Polski)

  • Zbigniew Żółkiewski

    (Narodowy Bank Polski)

Abstract

Our study presents a comparison of the results of several methods of including mixed income in the measurement of the labor share based for Poland in the period 2000-2021. We account for the heterogeneity of labor input in the measurement of labor share. Moreover, we introduce an original method, accounting for heterogeneity of labor tax rates between employed and self-employed. All the methods considered are consistent with the national accounts. We apply the labor share measurement methods for Poland, an emerging economy with a particularity high prevalence of self-employment. We show that the corrections of the payroll labor share are substantial and range from 8 to 13 pp. None of the methods applied show a remarkable downward trend in labor share, frequently found in the advanced countries. Instead, labor share in Poland declines clearly up to 2004, but then rises by about 2-5 pp. by the end of 2021. There are diverse patterns on a sectoral level - downward tendencies of labor share in manufacturing and other industries, and increasing tendencies in services. A shift-share analysis shows that the overall change of labor share is mainly due to within industry changes. A positive contribution to labor share of a rising importance of services is neutralized by a negative reallocation effect.

Suggested Citation

  • Michał Gradzewicz & Janusz Jabłonowski & Michał Sasiela & Zbigniew Żółkiewski, 2024. "Measuring labor share for Poland – does heterogeneity of labor compensation matter?," NBP Working Papers 368, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:368
    Note: The authors are greatful to colleagues from NBP/DABE for insightful comments. The views expressed herein are those of the authors and not necessarily those of Narodowy Bank Polski. All remaining errors are ours.
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    More about this item

    Keywords

    labor share; Poland; wage heterogeneity; self-employment; labor tax; shift share;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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