Income distribution in OECD countries: A long-term view

We look at how income distribution has been split between profits and wages in OECD countries since the early 1970s. We examine the consequences of anomalies in income distribution on: Profitability and investment; Private and public debt. We see, successively, periods when: Income distribution is abnormally negative for wage earners, which are associated with excess corporate savings, excess household debt or excess public debt to boost household income; Income distribution is abnormally negative for profits, leading to a shortfall in investment and inflation. Both income distribution regimes are problematic and OECD countries should succeed in stabilising an income distribution that is balanced between wages and profits.