The Declining Labor Share of Income

Francisco Rodríguez and Jayadev Arjun ()
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Jayadev Arjun: Economics Department, University of Massachusetts Boston, 100 Morrisey Boulevard, Boston, MA 02125, USA

Journal of Globalization and Development, 2013, vol. 3, issue 2, 1-18

Abstract: We use two separate panel datasets, one at the economy-wide level and one for the manufacturing sector alone to examine trends in the labor share over the last three decades. Both datasets show that labor shares have decreased, starting from about 1980, in most regions of the world. This finding is robust to adjustments for self-employment as well as adjustments for the unbalanced panel structure of both datasets. Furthermore, we present evidence that as a first approximation, this decrease is driven by declines in intra-sector labor shares as opposed to movements in activity towards sectors with lower labor shares. Finally, we show that global labor share at the economy wide level has been falling.

Date: 2013
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Working Paper: The Declining Labor Share of Income (2010)
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DOI: 10.1515/jgd-2012-0028

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Journal of Globalization and Development is currently edited by Joseph E. Stiglitz, Kevin Gallagher, Jeronim Capaldo, Arjun Jayadev, José Antonio Ocampo and Dani Rodrik

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