What is economic development and how has this concept evolved over the years? The economic part of this concept may seem relatively simple. Of course, the steady growth of per capita income, as it is traditionally measured, is an anchor, both in concept and in reality. It would be strange to call the decline in per capita income an economic development. But the growth of per capita income, although necessary, is, of course, insufficient for development, and even for economic development.The distribution of this growing income among the population legitimately belongs to the sphere of economic development. Two key characteristics of income distribution are inequality and poverty. If the average income is growing, but at the same time the inequality of its distribution is also increasing, then the egalitarian point of view will mark the latter as a negative aspect of economic development. If at the same time poverty increases - the number of people with an income below a socially acceptable level - then this is another negative point that will be put in contrast to the growth of average income when assessing economic development. Of course, the real outcome in relation to poverty will depend on the interaction between average income and inequality and on which of these two forces dominates empirically. But identifying economic development exclusively with income is too narrow a concept. Other aspects of well-being certainly matter. Education and health, for example, go beyond income. They themselves are important indicators of well-being, but they affect income and depend on it. A high income can provide an educated and healthy population, but an educated and healthy population also provides a high income. Thus, any assessment of development, and even economic development, should take into account a wider range of indicators of well-being than just income and its distribution. Education and health, as well as their distribution among the population, are also important.Distribution is not just inequality between individuals. Inequality between broadly defined groups is also a key factor. Gender inequality undermines economic development because it suppresses the potential of half of the population. Thus, the improvement of gender inequality indicators should be sought not only by itself, but also in connection with the contribution that it makes to economic growth and to solving the problem of economic inequality. Similarly, inequality between ethnic and regional groups provokes social tensions and affects the climate for investment and, consequently, economic growth. It is difficult to separate these seemingly non-economic dimensions from narrowly economic ones. Thus, economic development is also development in general.With a narrow focus on measurable market income, the use of resources that do not have an appropriate market price is overlooked. The most important of these is the environment, especially in the context of greenhouse gas emissions and climate change. The growth of national income in the traditional dimension does not take into account either the loss of irreplaceable environmental resources at the national level, nor, in the case of climate change, the irreversible movement towards catastrophic risks for the planet on which we live.The past and present of economic development creates a platform for a long-term future. Environmental degradation and climate change will undoubtedly worsen development prospects and lead to an increase in conflicts and migration associated with environmental stress. These issues have been well discussed in the literature, and the necessary actions are relatively clear - the only question is whether there is political will to implement them.In addition to the problems arising from environmental changes and environmental degradation, another important problem that has arisen since the 1980s is the global decline in the share of the labor force. The labor share is the share of employee benefits in gross national product at the national level or in total income at the firm level.The trend of its decline on a global scale is obvious both on the basis of macroeconomic data and on the basis of data at the firm level. The decline in the share of labor is a symptom of the fact that overall economic growth is outpacing total labor income. In the period from the late 1970s to the 2000s, the share of labor decreased by almost five percentage points from 54.7% to 49.9% in advanced economies. By 2015, this indicator recovered slightly and amounted to 50.9%. In emerging markets, the labor force share also declined from 39.2% to 37.3% between 1993 and 2015. Failure to coordinate appropriate policy measures in the face of these changes can lead to alarming consequences for future economic development. Indeed, the decline in the share of the labor force, despite overall economic progress, is often seen as the fuel that has fanned the fire of anti-immigration and anti-globalization protests in recent years, threatening a retreat from decades of progress in trade and capital market liberalization around the world.It should be noted that the labor force share and income inequality are inextricably linked. Indeed, the labor share is often used as a measure of income inequality. Understanding the forces that determine the share of labor has been an extremely important aspect of the economic development landscape. Indeed, this search has guided research in the field of trade and development economics for decades, during which the forces of globalization and its many nuances of impact on the share of labor have been studied in detail. Nevertheless, there is every reason to believe that canonical economic models often do not provide forecasts consistent with the current picture of a decline in the share of labor in the global economy. Such observations contradict the canonical forecasts of economic models based on assumptions about the immutability of technologies, perfect competition and the absence of market imperfections. According to these assumptions, the standard prediction is that workers in relatively labor-surplus countries should strictly benefit from participation in world trade both in absolute terms and relative to the owners of other factors of production. However, in contrast, after China assumed the role of the world's largest factory, it experienced one of the most significant rates of decline in the share of labor since 1993. It is here that additional research can bring significant dividends in deepening our understanding of how emerging markets function and how they respond to shocks. Some important mediating factors have already been identified. These include the existing distortions in the labor market, which can distort the decision-making process about technological changes, as well as the friction of search in the labor market and the resulting possibility of a complex distributional reaction to technological changes. In addition, it is necessary to develop and implement policy measures to respond to labor-saving technical changes, including, possibly, public investment in research on the development of effective technologies for the use of labor.In addition to differences in labor share at the national or market level, recent firm-level data has inspired a surge of research showing that employer market power can lead to systematic differences in labor share between firms with heterogeneous levels of productivity. It is already well known that globalization disproportionately favors high-performing firms. The rise of superstar firms in recent years in the United States, with their clearly higher propensity to adopt labor-saving technologies, serves as an excellent example of how organizational changes in industry can affect the overall share of labor. The employer's market power has also become a fact of life in emerging markets.Does the importance of large firms shift disproportionately in favor of the introduction of labor-saving technologies in the course of economic development? Or do they actually value employee morale and pay higher wages? These are the most important issues that can form the basis of a number of policy decisions, from the expediency of setting a minimum wage to facilitate the conclusion of more profitable wage deals for employees to the use of competition policy as an instrument of economic development, for example. Modern employment contracts are no longer like textbook conditions with one employer and one employee, which are the basis of many political recipes. Instead, workers often face wage deals that are limited to fixed-term or temporary contracts. Or, employment contracts are increasingly mired in ambiguity arising in relations with several employers, where employees must report not only to their superiors at the plant, but also to many subcontractors-intermediaries. This development has led to wage inequality in enterprises where fixed-term and subcontractors face a significant discount in wages compared to permanent employees, while access to unpaid benefits is limited. Strikingly, employment growth can now lead to insignificant or even negative wage growth, since the contractual composition of employees changes as employment increases. All this suggests that the decline in the share of the labor force caused by contractual changes in the labor market may ultimately negatively affect the pace of overall economic progress.

Attempts to solve the problem of wage inequality between employees in enterprises is only an emerging area of research, and the intriguing thing here is the possibility that we now have a number of circumstances in which policies to mitigate inequality, by increasing employee morale, can ultimately also increase overall efficiency.We began this chapter by emphasizing the shared importance of shared economic progress and income inequality as indicators of development. Our brief look at the future of the economic development landscape sheds light on the critical importance of combining different points of view in our understanding of how these two development metrics are codetermined.