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Intermediate Input Prices and the Labor Share / Juanma Castro-Vincenzi, Benny Kleinman.
- Format:
- Book
- Author/Creator:
- Castro-Vincenzi, Juanma.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w35114.
- NBER working paper series no. w35114
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2026.
- Summary:
- We argue that the relative price of materials is an important determinant of the labor share of income. When materials and primary inputs are complements and the profit share is positive, a higher price of materials lowers the labor share and raises the profit share of value added, without requiring markups or returns to scale to change. We show that materials-price fluctuations align with U.S. labor-share trends, provide causal evidence on this mechanism across industries and commuting zones, and quantify its importance in a dynamic quantitative model. Finally, we use our mechanism to rationalize differential labor-share trends across countries.
- Notes:
- April 2026.
- Print version record
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