Section: Leaders – Pay and Economic Growth
Title of Article: A Shrinking Slice
Page: 14 to 15
Summary
The article mainly conveys about the contracting trend of the labor sector’s share of the national income. Before the early 1980s, that share was very stable that it was considered a constant share commonly used in modern macroeconomics. However, over the past 30 years, that share has shrunk across the globe. One of the reasons mentioned, among others, is the ever increasing prevalence of innovation, especially in information technology (IT), which has dramatically increased the wages of IT- skilled workers while wages in other sectors are left behind. This ongoing occurrence has negative consequences to the economy. Since capital is mostly owned by the rich, it’s increasing share in the national income worsens the state of inequality or causes the widening of the gap between the rich and the poor. In conclusion, the article suggests that a good strategy to resolve the issue is to boost ordinary workers’ share of capital.
Reporter’s Own Thoughts
I find the article very informative and relevant to the existing/present issues in the global community. The article made me comprehend further the relationships that exist between the different aspects of the economy. For the national income to be broadly stated to represent the economic status of states, it would be prudent to take a closer look into the trends of the different sectors under it for further appreciation of how economies are functioning and performing. By examining the different aspects of the national income, e.g., trends in the labor sector, nations can formulate specific strategies that can address standing issues more effectively.
Aldwin Urbina, M2 Student