The Global Decline of the Labor Share*

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ID: 291439
2013
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Abstract
Abstract The stability of the labor share of income is a key foundation in macroeconomic models. We document, however, that the global labor share has significantly declined since the early 1980s, with the decline occurring within the large majority of countries and industries. We show that the decrease in the relative price of investment goods, often attributed to advances in information technology and the computer age, induced firms to shift away from labor and toward capital. The lower price of investment goods explains roughly half of the observed decline in the labor share, even when we allow for other mechanisms influencing factor shares, such as increasing profits, capital-augmenting technology growth, and the changing skill composition of the labor force. We highlight the implications of this explanation for welfare and macroeconomic dynamics.
Reference Key
openalex_W2155379226 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Loukas Karabarbounis, Brent Neiman
Journal the quarterly journal of economics
Year 2013
DOI
10.1093/qje/qjt032
URL
https://doi.org/10.1093/qje/qjt032
Keywords Keywords not found

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