The Productivity Slowdown and the Declining Labor Share: A Neoclassical Exploration

Thomas Sampson, Gene Grossman, Elhanan Helpman and Ezra Oberfield

No 12342, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early postwar period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the U.S. labor share.

Keywords: Neoclassical growth; Balanced growth; Technological progress; Capital-skill complementarity; Labor share; Capital share (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-dge and nep-gro
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Citations: View citations in EconPapers (78)

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Working Paper: The productivity slowdown and the declining labor share: a neoclassical exploration (2017)
Working Paper: The Productivity Slowdown and the Declining Labor Share: A Neoclassical Exploration (2017)
Working Paper: The productivity slowdown and the declining labor share: a neoclassical exploration (2017)
Working Paper: The Productivity Slowdown and the Declining Labor Share: A Neoclassical Exploration (2017)
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