The Global Decline of the Labor Share / Loukas Karabarbounis, Brent Neiman.

Format:

Book

Author/Creator:

Karabarbounis, Loukas.

Contributor:

National Bureau of Economic Research.

Neiman, Brent.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19136.

NBER working paper series no. w19136

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2013.

Summary:

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.

Notes:

Print version record

June 2013.