once again on labors share

http://www.clevelandfed.org/research/commentary/2012/2012-13.cfm

this from the cleveland FED no less

income inequality between households grows two ways :

"if the concentration index of labor and/or capital rises "

or
"if there is a shift from the less concentrated labor income
 to the more concentrated capital income"

enter the share calculation....


According to the FED elves  model
"  the labor share trend has declined since 1980, with an accelerated drop in the 2000s,"

"In the BEA data, the trend declined from
 as high as
 69 percent before 1980
to
 66.9 percent in 2000,
to
 64.9 percent today

". In the BLS data, the trend declined from
approximately 64.5 percent before 1980
 to
 62.8 percent in 2000,
to
59.8 percent today.

" According to these measures, the trend in the labor share declined 1.5 to 2 percentage points between 1980 and 2000, and then dropped an additional 2 to 3 percentage points, for a total of 4 to 4.5 percentage points."








here's the code to the magic trend line build by these FED elves

" A Model of the Labor Share"


"  the labor share fluctuates cyclically around an underlying slow-moving trend"

"The labor share
peaks
 right after the beginning of a recession

declines
during the rest of the recession and the initial phase of the recovery

 picks up and returns to trend
during the later phase of the recovery. "
                       ie
"the labor share is related to the tightness of the labor market:

 declines
when unemployment is high

and increases
 when unemployment is low.

 a high level of unemployment
 tends to be followed by a decline in the labor share"



"The correlation between the unemployment gap
and the change in the labor share
 over the subsequent year is negative and large "

"in the long run
. The main factors:

"technology available to produce goods and services.


increased globalization and trade openness,


 changes in labor market institutions and policies."

------nice and laconic eh ?-----

the simple calculation:

". To compute the trend,
 begin with the labor share,
 subtract
 the cyclical component "

okay

" separate the long-run  trend
from  transitory components ."

sounds easy

how much income inequality is wage structure changes ?

not much eh ?

its that capital income thing isn't it
you know increases in capital income concentration

fed elves:
"has dominated the dynamics of income inequality during the past two business cycles"