The Decline of Labor Share and New Technology Diffusion: Implications forMarkups andMonopsony Power

Shoki Kusaka, Tetsuji Okazaki, Ken Onishi and Naoki Wakamori
Additional contact information
Shoki Kusaka: Department of Economics, Yale University
Tetsuji Okazaki: Faculty of Economics, The University of Tokyo
Ken Onishi: Hitotsubashi Institute for Advanced Study

No CIRJE-F-1208, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We study the mechanism behind the decline in labor share using highly detailed plant-level data on the cement industry in Japan. Using information on the production technology in place at each plant, we find that most of the labor share decline can be explained by new technology diffusion (introduction of the “new suspension preheater kiln†). The labor share stays constant, or even slightly increases, over time within plants with the same technology, whereas the aggregate labor share declines as production shifts to plants with a new and more capital-intensive technology. We also find that the information on plant-level technology is key to rejecting other potential hypotheses and that we would reach a qualitatively different conclusion without this information. To show this, we examine, with and without technology information, two alternative hypotheses; (i) the decline in labor share is associated with an increase in markups, and (ii) firms exercise monopsony power in the labor market. We reject these two hypotheses with technology information but may not without it.

Pages: 45 pages
Date: 2022-12
New Economics Papers: this item is included in nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.cirje.e.u-tokyo.ac.jp/research/dp/2022/2022cf1208.pdf (application/pdf)

Related works:
Working Paper: The Decline of Labor Share and New Technology Diffusion: Implications for markups and monopsony power (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2022cf1208

Access Statistics for this paper

More papers in CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo Contact information at EDIRC.
Bibliographic data for series maintained by CIRJE administrative office ().