4. The purpose of this question is to provide your experience in estimating the share of labor income. You can use Excel or any computer program you desire. Please only submit the part I ask you for. a. First, go to the Bureau of Economic Analysis website and search for Table 1.10. (Finding data is part of the research process...) b. Modify and download the data from 1929 to 2022 annually. You can set the measurement unit in billions of US dollars. c. Estimate the labor share of income for each year by doing this: Labor Share of Income - Compensation of Employees A -*100% Where A = Gross Domestic Income - Consumption of Fixed Capital - Taxes on Production and Imports - Less: Subsidies 1 Let me explain the logic of the above equation: the numerator is clear, and the compensation of employees represents the total income the labor class receives. The denominator is more complicated. Gross domestic income represents the total amount of income of the economy. We subtract consumption of fixed capital because it represents a deduction from income to account for the loss in capital value owing to the use of capital goods in production., we also subtract taxes and subsides because those are transfer income, if you recall from the principle class, transfer income does not count toward economic activity. d. Suppose the economy's production function (F (L, K)) exhibits constant return to scale. Estimate the capital share income of each year. e. (SUBMIT) By now, you should have two time series data: Labor share of income and Capital share of income. Plot these two curves in the same graph. In the graph, the x-axis should be time. Make sure you put a legend in the graph to indicate which curve is the labor share of income and which curve is the capital share of income. f. (SUBMIT) Calculate the overall average labor share of income. g. (SUBMIT) Calculate the average labor share of income of each period: 1980- 1989, 1990-1999, 2000-2009, and 2010-2022. h. (SUBMIT) Based on the recent trend of the labor share of income (you calculate from part (g)), Do you think the labor share of income will increase or decrease in the next ten years? Explain your rationale.
4. The purpose of this question is to provide your experience in estimating the share of labor income. You can use Excel or any computer program you desire. Please only submit the part I ask you for. a. First, go to the Bureau of Economic Analysis website and search for Table 1.10. (Finding data is part of the research process...) b. Modify and download the data from 1929 to 2022 annually. You can set the measurement unit in billions of US dollars. c. Estimate the labor share of income for each year by doing this: Labor Share of Income - Compensation of Employees A -*100% Where A = Gross Domestic Income - Consumption of Fixed Capital - Taxes on Production and Imports - Less: Subsidies 1 Let me explain the logic of the above equation: the numerator is clear, and the compensation of employees represents the total income the labor class receives. The denominator is more complicated. Gross domestic income represents the total amount of income of the economy. We subtract consumption of fixed capital because it represents a deduction from income to account for the loss in capital value owing to the use of capital goods in production., we also subtract taxes and subsides because those are transfer income, if you recall from the principle class, transfer income does not count toward economic activity. d. Suppose the economy's production function (F (L, K)) exhibits constant return to scale. Estimate the capital share income of each year. e. (SUBMIT) By now, you should have two time series data: Labor share of income and Capital share of income. Plot these two curves in the same graph. In the graph, the x-axis should be time. Make sure you put a legend in the graph to indicate which curve is the labor share of income and which curve is the capital share of income. f. (SUBMIT) Calculate the overall average labor share of income. g. (SUBMIT) Calculate the average labor share of income of each period: 1980- 1989, 1990-1999, 2000-2009, and 2010-2022. h. (SUBMIT) Based on the recent trend of the labor share of income (you calculate from part (g)), Do you think the labor share of income will increase or decrease in the next ten years? Explain your rationale.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:4. The purpose of this question is to provide your experience in estimating the share of labor
income. You can use Excel or any computer program you desire. Please only submit the
part I ask you for.
a. First, go to the Bureau of Economic Analysis website and search for Table 1.10.
(Finding data is part of the research process...)
b.
Modify and download the data from 1929 to 2022 annually. You can set the
measurement unit in billions of US dollars.
c. Estimate the labor share of income for each year by doing this:
Labor Share of Income - Compensation of Employees
A
-*100%
Where A = Gross Domestic Income - Consumption of Fixed Capital - Taxes on
Production and Imports - Less: Subsidies 1
Let me explain the logic of the above equation: the numerator is clear, and the
compensation of employees represents the total income the labor class receives.
The denominator is more complicated. Gross domestic income represents the total
amount of income of the economy. We subtract consumption of fixed capital
because it represents a deduction from income to account for the loss in capital
value owing to the use of capital goods in production., we also subtract taxes and
subsides because those are transfer income, if you recall from the principle class,
transfer income does not count toward economic activity.
d. Suppose the economy's production function (F (L, K)) exhibits constant return to
scale. Estimate the capital share income of each year.
e. (SUBMIT) By now, you should have two time series data: Labor share of income
and Capital share of income. Plot these two curves in the same graph. In the
graph, the x-axis should be time. Make sure you put a legend in the graph to
indicate which curve is the labor share of income and which curve is the capital
share of income.
f.
(SUBMIT) Calculate the overall average labor share of income.
g. (SUBMIT) Calculate the average labor share of income of each period: 1980-
1989, 1990-1999, 2000-2009, and 2010-2022.
h. (SUBMIT) Based on the recent trend of the labor share of income (you calculate
from part (g)), Do you think the labor share of income will increase or decrease in
the next ten years? Explain your rationale.
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