User:Golopotw/sandbox/wage share

The wage share is the share of wages in national income, that is, the ratio between total wages paid and GDP. Often two adjustments are made to the wage share. First, there is an adjustment that imputes wage payments for self-employed workers. This is particularly important for developing countries where a large part of the population is self employed. The adjusted wage share imputes wage payments for the self-employed to avoid counting all their income as profit income (Krueger 1999, Gollin 2002).

The second adjustment transforms the wage share for the total economy into the private wage share.The wage share of the total economy is the sum of the private wage share (WSP) and the government wage share (WSG) weighted by their respective sizes. The government consumption (CG) as percent of GDP is used as measure for the size of the government sector:
 * $$WS = (1- CG)*WS^P + CG*WS^G$$

As the wage share in the government sector is equal to 1, we can reconstruct the private wage share as
 * $$WS^P =(WS-CG)/(1-CG)$$