The share of labour income in gross domestic product (GDP) has been coming down in most advanced economies over the past three decades. One of his many insights is that the way national income is distributed in an economy depends on the market power of large companies in that economy. He argued that the share of labour income in GDP will fall as firms gain market power. Firms with market power can charge higher prices, in effect shifting income from labour to capital. Income inequality in India is also about a failure to create conditions for job creation by productive firms.

Source: Mint July 13, 2021 16:18 UTC