Formula for the Wage Share
The wage share is the fraction of a worker's total output (λ) that is paid as a real wage (w). This share is determined by the firm's profit share (σ), which in turn depends on market competition. The relationship is defined by the formula: . This equation shows that the wage share is what remains of the output per worker after the firm's profit share is accounted for.
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Introduction to Macroeconomics Course
Ch.2 Unemployment, wages, and inequality: Supply-side policies and institutions - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Learn After
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