The Elusive Explanation for the Declining Labor Share

Ezra Oberfield and Gene M. Grossman ()
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Gene M. Grossman: Department of Economics, Princeton University, Princeton, New Jersey, USA

Annual Review of Economics, 2022, vol. 14, issue 1, 93-124

Abstract: A vast literature seeks to measure and explain the apparent decline in the labor share in national income that has occurred in recent times in the United States and elsewhere. The culprits include technological change, increased globalization and the rise of China, the enhanced exercise of market power by large firms in concentrated product markets, the decline in unionization rates and the erosion in the bargaining power of workers in labor markets, and the changing composition of the workforce due to a slowdown in population growth and a rise in educational attaintment. We review this literature, with special emphasis on the pitfalls associated with using cross-sectional data to assess this phenomenon and the reasons why the body of papers collectively explains the phenomenon many times over.

Keywords: labor share; capital share; profit share; income distribution (search for similar items in EconPapers)
JEL-codes: E25 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (62)

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Working Paper: The Elusive Explanation for the Declining Labor Share (2021)
Working Paper: The Elusive Explanation for the Declining Labor Share (2021)
Working Paper: The Elusive Explanation for the Declining Labor Share (2021)
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DOI: 10.1146/annurev-economics-080921-103046

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