Macroeconomics

The Ratio of Labor Income to Total Income

Labor income has

remained about 0.7 of total income over a long period of time. This

approximate constancy of factor shares is consistent with the

Cobb–Douglas production function.

Source: U.S. Department of Commerce. This figure is produced from U.S. national

income accounts data. Labor income is compensation of employees. Total income is

the sum of labor income, corporate profits, net interest, rental income, and

depreciation. Proprietors’ income is excluded from these calculations, because it is a

combination of labor income and capital income.