American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
The Decline of the Labor Share: New Empirical Evidence
American Economic Journal: Macroeconomics
vol. 14,
no. 3, July 2022
(pp. 163–98)
Abstract
We use time series techniques to estimate the importance of four main explanations for the decline of the US labor income share: rising firm markups, falling bargaining power of workers, higher investment-specific technology growth, and more automated production processes. Identification is achieved with restrictions derived from a stylized model of structural change. Our results point to automation as the main driver of the labor share, although rising markups have played an important role in the last 20 years. We also find evidence of capital-labor complementarity, suggesting that capital deepening may have raised the labor share.Citation
Bergholt, Drago, Francesco Furlanetto, and Nicolò Maffei-Faccioli. 2022. "The Decline of the Labor Share: New Empirical Evidence." American Economic Journal: Macroeconomics, 14 (3): 163–98. DOI: 10.1257/mac.20190365Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- E25 Aggregate Factor Income Distribution
- J51 Trade Unions: Objectives, Structure, and Effects
- L23 Organization of Production
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O41 One, Two, and Multisector Growth Models
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