Capital productivity and the decreasing wage share in the United States: a Keynesian Approach

Carles Manera, Ferran Navines, Jose Perez-Montiel and Javier Franconetti

Journal of Post Keynesian Economics, 2022, vol. 45, issue 3, 429-453

Abstract: We argue that in the US there is a causal relationship running unidirectionally from negative shocks in capital productivity to negative variations in the wage share. We sustain that, faced with a capital productivity decrease, the US firm sector pushes wages down to maximize the rate of profit. Through asymmetric SVAR techniques that are robust to endogeneity and structural breaks; we show that decreases in capital productivity unidirectionally cause decreases in the wage share. We offer some possible explanations for that.

Date: 2022
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DOI: 10.1080/01603477.2022.2068034

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