What Explains the Decline of the U.S. Labor Share of Income? An Analysis of State and Industry Level Data

Yasser Abdih and Stephan Danninger

No 2017/167, IMF Working Papers from International Monetary Fund

Abstract: The U.S. labor share of income has been on a secular downward trajectory since the beginning of the new millennium. Using data that are disaggregated across both state and industry, we show the decline in the labor share is broad-based but the extent of the fall varies greatly. Exploiting a new data set on the task characteristics of occupations, the U.S. input-output tables, and the Current Population Survey, we find that in addition to changes in labor institutions, technological change and different forms of trade integration lowered the labor share. In particular, the fall was largest, on average, in industries that saw: a high initial intensity of “routinizable” occupations; steep declines in unionization; a high level of competition from imports; and a high intensity of foreign input usage. Quantitatively, we find that the bulk of the effect comes from changes in technology that are linked to the automation of routine tasks, followed by trade globalization.

Keywords: WP; NAICS industry code; state labor; industry concentration; Routine tasks; offshoring; labor share; unions; import competition; employment weight; shift share analysis; i. Next; Imports; Labor markets; Global (search for similar items in EconPapers)
Pages: 26
Date: 2017-07-24
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Citations: View citations in EconPapers (13)

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