IS LABOR'S LOSS CAPITAL'S GAIN? GROSS VERSUS NET LABOR SHARES

Benjamin Bridgman

Macroeconomic Dynamics, 2018, vol. 22, issue 8, 2070-2087

Abstract: US labor share has been falling since the 1970s. I show that it has not fallen as much once items that do not add to capital, depreciation and production taxes, are netted out. Recent net labor share is within its historical range, whereas gross share is at its lowest level. This effect holds for other high-income economies. The overall picture is no longer one of unprecedented, globally declining labor share. Using gross share as a proxy for net share can give misleading results. US gross share and inequality are correlated, whereas net share, the correct measure, is not.

Date: 2018
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Working Paper: Is Labor's Loss Capital's Gain? Gross versus Net Labor Shares (2014)
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