Bowley's law

Bowley's law is an observation in econometrics that the proportion of gross national product from labor is constant.^[1] It is named for Arthur Bowley, the statistician who first observed it, based on economic data in Britain from the late 19th and early 20th centuries.^[2] Bowley first published his wage and income data in his 1900 Wages in the United Kingdom in the Nineteenth Century. In a 1920 work he was speculating on an apparent share constancy between earned income and national income, and in his Wages and Income in the United Kingdom since 1860 of 1937 Bowley was asserting that the data clearly showed the constant relationship.^[3] However, the term "Bowley's Law" did not appear in print before the sixth edition of Paul Samuelson's textbook Economics in 1964.^[3]

Bowley's Law has long been both an empirical and theoretical point of contention between rival theories of macroeconomic (functional) distribution,^[4] Its empirical justification has come under particular review, and, contra Bowley's Law, "increasingly more literature acknowledges the long-term decline of the wage share in most countries in the last 30 years or so."^[3]

References

1. Bronfenbrenner, Martin (November 30, 2006). Income Distribution Theory. Transaction Publishers. pp. 80–81. ISBN 0202308499. Retrieved June 3, 2015.
2. Fisher, David Hackett (1999). The Great Wave: Price Revolutions and the Rhythm of History. Oxford University Press US. p. 294. ISBN 019512121X. Retrieved June 3, 2015.
3. Krämer, Hagen M. (2011). "Bowley's Law: The Diffusion of an Empirical Supposition Into Economic Theory". Cahiers d'économie politique/Papers in Political Economy (61): 19–49. JSTOR 43107795.
4. Carter, Scott (2007). "Real wage productivity elasticity across advanced economies, 1963-1996". Journal of Post Keynesian Economics 29 (4): 573–600. Retrieved June 3, 2015.