Economics at your fingertips  

Cognitive Aging and Labor Share

Nat Kausik ()

Papers from

Abstract: Labor share, the fraction of economic output accrued as wages, is inexplicably declining in industrialized countries. Whilst numerous prior works attempt to explain the decline via economic factors, our novel approach links the decline to biological factors. Specifically, we propose a theoretical macroeconomic model where labor share reflects a dynamic equilibrium between the workforce automating existing outputs, and consumers demanding new output variants that require human labor. Industrialization leads to an aging population, and while cognitive performance is stable in the working years it drops sharply thereafter. Consequently, the declining cognitive performance of aging consumers reduces the demand for new output variants, leading to a decline in labor share. Our model expresses labor share as an algebraic function of median age, and is validated with surprising accuracy on historical data across industrialized economies via non-linear stochastic regression.

Date: 2023-08, Revised 2024-01
New Economics Papers: this item is included in nep-neu
References: View references in EconPapers View complete reference list from CitEc

Downloads: (external link) Latest version (application/pdf)

Related works:
Working Paper: Cognitive Aging and Labor Share (2023) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Papers from
Bibliographic data for series maintained by arXiv administrators ().

Page updated 2024-07-01
Handle: RePEc:arx:papers:2308.14982