The relationship between labor share and human development in developed and developing countries

The human development index, presented by the United Nations since 1990, emphasizes the importance of development indicators as well as the economic growth of countries. Human development is an issue that needs to be emphasized because it improves the welfare levels of countries, provides people with better living conditions and has an impact on countries' economic development decisions. Labor share is an important socioeconomic indicator in terms of welfare due to many factors such as technological development, globalization and privatization policies. Since the labor share as a part of income is a factor that directly affects individuals' living standards, it also plays an important role in consumption preferences. For this purpose, in the thesis study, the labor share and human development relationship for 26 developing and 32 developed countries in the period 1990-2019 was analyzed using the Driscoll and Kraay estimator. The findings show that the labor share has a significant and negative impact on human development in both developed and developing countries. However, it appears that per capita GDP, human capital, financial development and public expenditures have a significant positive impact on human development in developed and developing countries. A significant negative relationship has been identified between inflation, exchange rate and human development in developed and developing countries. Although a significant positive relationship was observed between trade openness, capital openness and human development in developed countries, no significant relationship was found in developing countries. In both developed and developing countries, there was no discernible correlation between foreign direct investments and human development. Finally, various suggestions are made to policy makers to solve the negative relationship between labor share and human development obtained from the analysis.