The labor share puzzle: Empirical evidence for European countries

Alessandro Bellocchi, Giovanni Marin and Giuseppe Travaglini

Economic Modelling, 2023, vol. 124, issue C

Abstract: Changes in labor share are documented in the literature, but its micro-sources remain unclear. At the macro level, the labor share is related to the capital-output ratio. Firm level evidence is scarce although very informative. In this paper we use microdata from European firms to study changes in labor share in 19 EU industries, over the period 2011–2019. Our results confirm that changes in firms' labor shares are related to these factors and that its decline has been accompanied by a reduction in capital accumulation, technological change and increasing markups. Further, we find heterogeneity among firms and show that the relationship between the labor share and the capital-output ratio is significantly nonlinear in many industries.

Keywords: Labor share; Firm-level analysis; Capital-output ratios; Technological change; Markups (search for similar items in EconPapers)
JEL-codes: D24 D33 J3 L11 L2 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:124:y:2023:i:c:s0264999323001396

DOI: 10.1016/j.econmod.2023.106327

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