Effects of macroeconomic aggregates on the functional distribution of income in Colombia between 2000 and 2020

Abstract

The study aims to contribute to the discussion of the economic variables that determine the functional distribution of income –measured as the share of wages in value added– in the three main sectors of Colombia, based on the theoretical position of the Post-Keynesian school. This school argues that this measure of income distribution may present a better measurement approximation than traditional distribution measures such as the Gini –since wage compensation and value added would be obtained from taxpayers’ information and not from surveys such as the Gini. Therefore, a sectoral analysis of the functional income distribution is presented, and a panel data model is estimated for the period 2000-2020. The results allow us to infer that the functional income distribution is explained and in fact improves with an increase in output, trade balance, taxes, and investment; however, the individual effect of each of these variables on the distribution is inelastic. Thus, it is concluded that the Post-Keynesian postulate is partially fulfilled in Colombia in the period under study.

Keywords

• Functional income distribution, macroeconomic development models, Post-Keynesian school.