Labour, profit and housing rent shares in Italian GDP: long-run trends and recent patterns

Roberto Torrini

No 318, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The share of labour increased in the first half of the 1970s, declined slowly to its 1960s level in 2001, and since then has been rising. Between 1975 and 2001, the decline in the labour share was due in part to the recovery in profits, and in part to a steady increase in housing rents on GDP, to 13 per cent of value added (5% in 1975) and almost 40 per cent of capital income (20% in the mid-1970s). Net of housing rents, the share of profits fell to a historical low during the great recession. In the business sector net of housing, recovery of the labour share, magnified by the recent recession, was evident in manufacturing and industries other than regulated sectors (energy, transport, communications and finance), where privatizations and changes to regulation provoked a marked drop in the labour share in the late 1990s. I tentatively explain the trend reversal in the labour share, which started well before the onset of the crises, as due to a compression in the mark-ups on marginal costs and the difficulty experienced by Italian firms to be rewarded for their innovation efforts (product quality upgrading) in a more competitive environment.

Keywords: factor shares; returns on capital; productivity; mark-ups (search for similar items in EconPapers)
JEL-codes: E22 E24 E25 J30 L32 L33 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-his, nep-lma, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Related works:
Journal Article: Labour, Profit and Housing Rent Shares in Italian GDP: Long-Run Trends and Recent Patterns (2015)
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