In an earlier tutorial, you derived a formula for labour's share of national income: (? ? ?)?(? + ?). Looking at the blue line in the figure below, we can see that - within the set of advanced economies - the share of national income paid to workers as fallen from about 54% in the 1970s to about 50% in the 2010s. We can use these shares in combination with the mark-up data presented earlier(?=?.?in1980and ?=?.?in2016)to say what must have happened to ?over the same period.

Calculate the values of ? in 1980 and 2016, using labour's share as 0.54 and 0.50 in those years, and interpret the result - is physical capital more or less important to production now or earlier?

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Labor is losing out The share of national income paid to workers has been declining in many countries. (evolution of the labor share of income, percent) 56 45 55 44 54 43 53 42 40 39 Advanced economies Emerging market and developing economies 38 48 36 46 35 45 34 44 33 197 1973 197 197 1982 985 1988 1991 1994 997 2000 2003 012 200 200 201 Advanced economies @ Emerging market and developing economies Source: IMF, World Economic Outlook, April 2017