abstract
- The labor income share in the value added reported by the Mexico's National Account System are extraordinarily small-between 0.25 and 0.3-compared with international standards. In this study we argue that there is a severe under-registration problem in the estimation of labor incomes, because of self-employment and the omitted labor income from employers and individuals that work but receive no wages. We propose three criteria to correct the labor share, the methods estimate a shadow wage for individuals, in some variants it is done using some strong assumptions, in others it is imputed by using Mincerian wage equations corrected by self-selection bias. It is found that once the adjustments are made the income labor share increases to the range of 42 to 47% of total value added, the corrections are particularly high in agriculture, construction, commerce and restaurants and services, sectors with a high incidence of informality.