Property income and compensation of employees in the Eurozone
As an addendum to this post about the division of income in the USA, which was inspired by this Business Insider article, a graph of property income and compensation of employees in the Eurozone (source: Eurostat):
1. Statistical details: differences between countries in the level of income of employees are to a large extent due to differences in the structure of the economy, for instance the percentage of ‘self employed’ (often small farmers). Comparing levels is hazardous, we’ll have to compare the changes. Property income is not the same thing as entrepreneurial income/profits but consists of interest, rents, distributed earnings of companies (i.e. mainly shareholder income) and some income from abroad. There is often a large ‘rent’ component in interests and distributed earnings (like the seigniorage profits which in the shape of interest on mortgage loans are earned by banks with a government licence to create
money legal tender, the so called Monetary Financial Institutions). Compensation of employees consists of gross wages and salaries plus employers’ contributions to social security.
2. Income is shown as a percentage of net national income. Note that in 2007 and 2008 EZ total property income plus compensation of employees was larger than 100% of net income which is possible when a lot of gross income is a net outflow of income.
And no: the bubble problem and the imbalances in Spain were not caused by overly high wages but by – a bubble.