The Decline Of The Labor Share

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What Explains The Decline Of The U S Labor Share Of Income An Analysis Of State And Industry Level Data

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Author : Mr.Yasser Abdih
language : en
Publisher: International Monetary Fund
Release Date : 2017-07-24

What Explains The Decline Of The U S Labor Share Of Income An Analysis Of State And Industry Level Data written by Mr.Yasser Abdih and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-07-24 with Business & Economics categories.

The U.S. labor share of income has been on a secular downward trajectory since the beginning of the new millennium. Using data that are disaggregated across both state and industry, we show the decline in the labor share is broad-based but the extent of the fall varies greatly. Exploiting a new data set on the task characteristics of occupations, the U.S. input-output tables, and the Current Population Survey, we find that in addition to changes in labor institutions, technological change and different forms of trade integration lowered the labor share. In particular, the fall was largest, on average, in industries that saw: a high initial intensity of “routinizable” occupations; steep declines in unionization; a high level of competition from imports; and a high intensity of foreign input usage. Quantitatively, we find that the bulk of the effect comes from changes in technology that are linked to the automation of routine tasks, followed by trade globalization.

The Global Decline Of The Labor Share

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Author : Loukas Karabarbounis
language : en
Publisher:
Release Date : 2013

The Global Decline Of The Labor Share written by Loukas Karabarbounis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with Economics categories.

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.

Production Technology Market Power And The Decline Of The Labor Share

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Author : Agustin Velasquez
language : en
Publisher: International Monetary Fund
Release Date : 2023-02-10

Production Technology Market Power And The Decline Of The Labor Share written by Agustin Velasquez and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-02-10 with Business & Economics categories.

The labor share has been declining in the United States, and especially so in manufacturing. This paper investigates the role of capital accumulation and market power in explaining this decline. I first estimate the production function of 21 manufacturing sectors along time series and including time-varying markups. The elasticities of substitution for most sectors are estimated below one, implying that capital deepening cannot explain the labor share decline. I then track the long-run evolution of the labor share using the estimated production technology parameters. I decompose aggregate labor share changes into sector re-weights, capital-labor substitution, and market power effects. I find that the increase in market power, as reported in recent studies, can account for, at least, 76 percent of the labor share decline in manufacturing. Absent the rise in market power, the labor share would have remained constant in the second half of the 20th century.

The Decline Of The Labor Share

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Author : Drago Bergholt
language : en
Publisher:
Release Date : 2019

The Decline Of The Labor Share written by Drago Bergholt and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.

We estimate a structural vector autoregressive model in order to quantify four main explanations for the decline of the US labor income share: (i) rising market power of firms, (ii) falling market power of workers, (iii) higher investmentspecific technology growth, and (iv) the widespread emergence of automation or robotization in production processes. Identification is achieved with theory robust sign restrictions imposed at medium-run horizons. The restrictions are derived from a stylized macroeconomic model of structural change. Across specifications we find that automation is the main driver of the long-run labor share. Firms' rising markups can, however, account for a significant part of the accelerating labor share decline observed in the last 20 years. Our results also point to complementarity between labor and capital, thus ruling out capital deepening as a major force behind declining labor shares. If anything, investment-specific technology growth has contributed to higher labor income shares in our sample.

The Global Decline Of The Labor Share

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Author : Loukas Karabarbounis
language : en
Publisher:
Release Date : 2015

The Global Decline Of The Labor Share written by Loukas Karabarbounis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.

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.

Understanding National Accounts Second Edition

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Author : Lequiller François
language : en
Publisher: OECD Publishing
Release Date : 2014-10-20

Understanding National Accounts Second Edition written by Lequiller François and has been published by OECD Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-10-20 with categories.

This is an update of OECD 2006 "Understanding National Accounts". It contains new data, new chapters and is adapted to the new systems of national accounts, SNA 2008 and ESA 2010.

The Decline Of The Labor Share Is Not Explained By The Capitalization Of Intellectual Property Products

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Author : Simcha Barkai
language : en
Publisher:
Release Date : 2021

The Decline Of The Labor Share Is Not Explained By The Capitalization Of Intellectual Property Products written by Simcha Barkai and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with categories.

The U.S. labor share has clearly been declining since the early 1980s. This does not depend on whether or not we capitalise intellectual property products. Koh, Santaeul'alia-Llopis and Zheng (2020) approximate the labor share by a single linear time trend over the entire period of 1929-2019. This period includes a long period of time over which the labor share is known to be mostly stable and a shorter period of time over which the labor share is known to decline. Once we separate out the period starting in the 1980s we recover the decline in the labor share.

The Elusive Explanation For The Declining Labor Share

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Author : Gene M. Grossman
language : en
Publisher:
Release Date : 2021

The Elusive Explanation For The Declining Labor Share written by Gene M. Grossman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with categories.

A vast literature seeks to measure and explain the apparent decline in the labor share in national income that has occurred in recent times in the United States and elsewhere. The culprits include technological change, increased globalization and the rise of China, the enhanced exercise of market power by large firms in concentrated product markets, the decline in unionization rates and the erosion in the bargaining power of workers in labor markets, and the changing composition of the workforce due to a slowdown in population growth and a rise in educational attainment. We review this literature, with special emphasis on the pitfalls associated with using cross-sectional data to assess this phenomenon and the reasons why the body of papers collectively explains the phenomenon many times over.

Declining Labor And Capital Shares

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Author : Simcha Barkai
language : en
Publisher:
Release Date : 2017

Declining Labor And Capital Shares written by Simcha Barkai and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.

This paper shows that the decline in the labor share over the last 30 years was not offset by an increase in the capital share. I calculate payments to capital as the product of the required rate of return on capital and the value of the capital stock. I document a large decline in the capital share and a large increase in the profit share in the U.S. non-financial corporate sector over the last 30 years. I show that the decline in the capital share is robust to many calculations of the required rate of return and is unlikely to be driven by unobserved capital. I interpret these results through the lens of a standard general equilibrium model, and I show that only an increase in markups can generate a simultaneous decline in the shares of both labor and capital. I provide reduced form empirical evidence that an increase in markups plays a significant role in the decline in the labor share. These results suggest that the decline in the shares of labor and capital are due to an increase in markups and call into question the conclusion that the decline in the labor share is an efficient outcome.

Why Is Labor Receiving A Smaller Share Of Global Income Theory And Empirical Evidence

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Author : Mai Chi Dao
language : en
Publisher: International Monetary Fund
Release Date : 2017-07-24

Why Is Labor Receiving A Smaller Share Of Global Income Theory And Empirical Evidence written by Mai Chi Dao and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-07-24 with Business & Economics categories.

This paper documents the downward trend in the labor share of global income since the early 1990s, as well as its heterogeneous evolution across countries, industries and worker skill groups, using a newly assembled dataset, and analyzes the drivers behind it. Technological progress, along with varying exposure to routine occupations, explains about half the overall decline in advanced economies, with a larger negative impact on middle-skilled workers. In emerging markets, the labor share evolution is explained predominantly by global integration, particularly the expansion of global value chains that contributed to raising the overall capital intensity in production.