Factor Income Dynamics: An Exploration

This dissertation explores the changing distribution of different types of income. These income types are earned by different people and are generated in in different ways. Labour income is paid to workers – employees and self-employed – who apply their time, energy, and knowledge to produce goods and services. Capital income is the reward for the owners of durable goods used in production, like buildings and machines.
For a long time, there has been a balance between the shares of total income flowing to labour and capital income. However, this balance has been shifting in many countries. The income share of labour has declined relative to the capital share. Around 1980, workers earned almost three euros for every one euro paid to capital-owners, now, this is less than two. Among other things, this is particularly relevant for inequality between workers and capitalists.
This dissertation explores different developments underlying this change. Superstar – large and powerful– firms have potentially contributed to declining labour shares. These large firms can keep their labour costs low and rely more on capital. The dissertation shows these firms have been gaining ground in the Netherlands in sectors like travel agencies, pharmaceuticals, and wholesaling.
A further development is the rising importance of intangible capital, durable production assets without physical form. Examples are software, patents, and brand names. Exploring the investments in these intangible assets has shown that they have become much more important to firms. This development Is particularly relevant in strongly globalized sectors.