wageshare

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I feel stupid for not being able to read a graph. I'm sure it can't mean that in 1998 al of the Middle East, Asia, Africa, North Africa, Lanitn America, and the rest of Asia had 100% of their GDP as wages. But that's what it looks like to me.

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1998 is being used as the base year for all countries. So in 2006, the share of GDP that went to wages in North Africa was about 65% of what it was in 1998 while almost every other country that year had 90% of the 1998 share.

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Does this suggest that the relationship between capital and labor is changing? I learned in my textbooks the familiar Cobb-Douglas production function and they suggest that the relationship was approximately 70% labor and 30% capital. I asked my professor if that relationship ever changed and he said that it had been very stable. If it is changing then what are the implications?

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This graph does not surprise me because that the North Africa wage GDP is so much lower than most of the other countries that it had to have fallen at some point. There are not many countries that can keep up with the wage GDP in competing countries such as the United States and Asia because of their industries. Undeveloped countries are not as likely to have a high GDP. This graph shows that the Middle East's wage GDP started to decrease in the year 1998 with a slight increase in 2000. What could have been the reasoning for such a huge drop off for the North African countries?

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