An Empirical Study of Labour’s Share in Income for Australia

Economists have long been studying the shares of labour and capital in income. Surprisingly, no such empirical studies exist for Australia. This paper looks at a number of variables that can affect labour’s share in income: unemployment, capacity utilisation, growth rate of GDP and changes in the price level. Our study finds that the wage share is inversely related to unemployment, capacity utilisation and the growth rate of GDP but positively related to changes in prices