Abstract

The paper examines empirically the evolution of income shares in the business sector as a whole and in various industries adopting a framework of analysis that does not rely on neoclassical substitution mechanisms. After showing that the increase in the profit share since the end of the seventies cannot be attributed to structural changes in output or labour force composition and that it is associated to increases in the "ex post" profitability of capital, we address the question of different profiles in the evolution of profit share and profitability in various sectors. We argue that the exchange rate regime, changes in international markets and in some instances, privatizations, have tended to cause a redistribution to profits from manufacturing to other sectors "via" changes in relative prices, particularly in phases characterized by a tendency to the real appreciation of the exchange rate, including the last part of the 1990s till 2002. We conclude that this situation may have contributed to the slow growth and recent stagnation of real wages, since manufacturing is the leading sector in wage determination.