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Revisiting the Global Decline of the (Non-housing) Labor Share

  • Germán Gutiérrez
  • Sophie Piton
American Economic Review: Insights
vol. 2, no. 3, September 2020
(pp. 321-38)
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Abstract

We show that cross-country comparisons of corporate labor shares are affected by differences in the delineation of corporate sectors. While the United States excludes all self-employed and most dwellings from the corporate sector, other countries include large amounts of both—biasing labor shares downward. We propose two methods to control for these differences and obtain "harmonized" non-housing labor share series. Contrary to common wisdom, the harmonized series remain stable or increase in all major advanced economies except the United States and Canada. These new facts cast doubts on most technological explanations for the decline of the labor share.

Citation

Gutiérrez, Germán, and Sophie Piton. 2020. "Revisiting the Global Decline of the (Non-housing) Labor Share." American Economic Review: Insights, 2 (3): 321-38. DOI: 10.1257/aeri.20190285

Additional Materials

JEL Classification

  • E25 Aggregate Factor Income Distribution
  • E26 Informal Economy; Underground Economy
  • J23 Labor Demand
  • O11 Macroeconomic Analyses of Economic Development
  • O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
  • P23 Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
  • P36 Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty