The Share of Dependent Work Income in Greece: Main Domestic and External Determinants

The stability of functional income distribution, that is, the distinction between labor and capital income, was considered for many decades as a “stylized fact of growth.” More recently, however, the prevailing hypothesis has been that this share is declining over time, at least in developed economies. Greece, contrary to the prevailing hypothesis of a downward trend of labor share in total income, has been associated with an upward trend of this share during the last decades. We look into the evolution of labor income share in total income in Greece in the period 1995–2021, for which reliable data are available, and our objective, in this chapter, is to highlight its main domestic and external determinants. We find that certain factors determine this upward trend, namely, the real gross domestic product (GDP) growth rate, the risk of poverty rate, the real labor productivity, the rate of trade to GDP, and the effect of economic crises that materialized during the years 2011–2016 of the great Greek economic slump and the years 2020–2021 of the coronavirus disease of 2019 (COVID-19) crisis.