IS LABOR'S LOSS CAPITAL'S GAIN? GROSS VERSUS NET LABOR SHARES

Benjamin Bridgman

105 citations0/0 files storedMacroeconomic Dynamics

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Economic Theory and Policy Labor market dynamics and wage inequality Income, Poverty, and Inequality

Abstract

US labor share has been falling since the 1970s. I show that it has not fallen as much once items that do not add to capital, depreciation and production taxes, are netted out. Recent net labor share is within its historical range, whereas gross share is at its lowest level. This effect holds for other high-income economies. The overall picture is no longer one of unprecedented, globally declining labor share. Using gross share as a proxy for net share can give misleading results. US gross share and inequality are correlated, whereas net share, the correct measure, is not.

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References

2014Capital in the Twenty-First Century 1999Inflation dynamics: A structural econometric analysis 2013The Global Decline of the Labor Share*1957A Model of Economic Growth 2000Capital-skill Complementarity and Inequality: A Macroeconomic Analysis 2002Getting Income Shares Right 1967Tax Policy and Investment Behavior 2015Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity

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2015Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality 2016The Facts of Economic Growth 2021The Micro-Level Anatomy of the Labor Share Decline*2017On the welfare implications of automation 2018Capital Shares and Income Inequality: Evidence from the Long Run 2020The Declining Worker Power Hypothesis: An explanation for the recent evolution of the American economy

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