In 2013, national income in the United States was \(\$ 14,542.4\) billion. In the same year, 137 million workers were employed, at an average wage, including benefits of \(\$ 64,667\) per worker per year. a. How much compensation of employees was paid in the United States in 2013 ? b. Analyze the factor distribution of income. What percentage of national income was received in the form of compensation to employees in \(2013 ?\) c. Suppose that a huge wave of corporate downsizing leads many terminated employees to open their own businesses. What is the effect on the factor distribution of income? d. Suppose the supply of labor rises due to an increase in the retirement age. What happens to the percentage of national income received in the form of compensation of employees?

Multiply the number of employed workers (137 million) by the average wage (including benefits) per worker per year (\$64,667) to find the total compensation of employees paid in the United States in 2013: Total compensation = (137 * 10^6) * 64,667 = 8,859,379,000,000 #a. The total compensation of employees paid in the United States in 2013 is approximately \$8.859 trillion.

Divide the total compensation of employees (\$8.859 trillion) by the national income (\$14,542.4 billion) and multiply by 100 to find the percentage: Percentage = (8,859,379,000,000 / 14,542,400,000,000) * 100 = Approx. 60.93 #b. In 2013, approximately 60.93% of national income was received in the form of compensation to employees. #c. A wave of corporate downsizing that leads to terminated employees opening their own businesses could potentially cause a shift in the factor distribution of income. These self-employed individuals, now considered business owners, would receive income in the form of profits rather than as compensation of employees. As a result, there could be an increase in the share of income going toward business owners and a decrease in the share of income received as compensation of employees. However, these shifts would depend on how many terminated employees open successful businesses and how these new businesses compare to the pre-existing workforce in terms of compensation and profits. #d. If the supply of labor rises due to an increase in the retirement age, there could be several potential effects on the percentage of national income received in the form of compensation of employees. An increased labor supply could lead to a downward pressure on wages, which would decrease the share of national income received as compensation. Conversely, if this increase in labor supply is accompanied by an increase in productivity that leads to economic growth, the overall national income may rise and the share received as compensation of employees could remain steady or even increase. The actual outcome would depend on the balance between wage pressures and economic growth, as well as other factors such as employment rates and the distribution of income between different sectors of the economy.