throughout the period 1990–2010. This may be partly due to the fact that the
inequality is measured using household data, not income data of individual earners.
Functional distribution of income.Another important driver of income inequality
is the change in functional distribution of income, defined as the labor share of
income in total value added (Galbraith 2011). The existing studies on this subject
have been devoted to how a shift in the functional distribution of income is related
to evolving distribution of personal incomes. Giovannoni (2010), for instance, provided
evidence that the wage share in member countries of the Organisation for
Economic Co-operation and Development (OECD) has been consistently declining
since the early 1980s, and this decline has been accompanied by rising income
inequality in manyOECDcountries.The decline in the labor income share has been
attributed to a number of factors, such as technological change and the declining
bargaining power of trade unions (ADB 2012).