The Decline of the Labor Share: New Empirical Evidence

Drago Bergholt, Francesco Furlanetto and Nicolò Maffei-Faccioli

American Economic Journal: Macroeconomics, 2022, vol. 14, issue 3, 163-98

Abstract: We use time series techniques to estimate the importance of four main explanations for the decline of the US labor income share: rising firm markups, falling bargaining power of workers, higher investment-specific technology growth, and more automated production processes. Identification is achieved with restrictions derived from a stylized model of structural change. Our results point to automation as the main driver of the labor share, although rising markups have played an important role in the last 20 years. We also find evidence of capital-labor complementarity, suggesting that capital deepening may have raised the labor share.

JEL-codes: D21 D43 E25 J51 L23 O33 O41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (31)

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Working Paper: The decline of the labor share: new empirical evidence (2019)
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DOI: 10.1257/mac.20190365

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