The share of national income earned by workers has been falling in most countries, and inequality has been rising as a result. The opposite is true in Malaysia. But what seems to be good news there is masking a worrying trend.

Income share has become a focus of economists and social policy advocates as the share of income taken by workers has fallen and that earned by the owners of capital has risen. It’s a global version of “the rich get richer” in effect, and has been seen throughout the world in recent years.

So, it makes sense that when labor income share was seen to be rising in Malaysia, and inequality evening out, the trend would draw attention.

Unfortunately, the reason behind what would seem on the surface a positive shift in Malaysia can likely be blamed on the country’s de-industrializing, says researchers for a working paper for the Asian Development Bank Institute.

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Read the working paper

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About the authors

Allen Ng is director of research at Malaysia’s Khazanah Research Institute.

Tan Theng Theng and Tan Zhai Gen are research assistants at the institute.

Know more about ADBI’s work

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