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The fall of the labour income share: the role of technological change and imperfect labour markets

Francesco Carbonero (), Christian J. Offermanns and Enzo Weber

No 201728, IAB Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "The non-constancy of factor shares is drawing the attention of many researchers. We document an average drop of the labour share of 8 percentage points for eight European countries and the US between 1980 and 2007. We investigate theoretically and empirically two mechanisms: the substitution between Information Communication Technology (ICT) and labour and the presence of hiring costs. We find that the ICT-labour replacement is a promising channel to explain the decline of the labour share, though labour market frictions takes part of its explanatory power over. In particular, hiring costs have a bigger role in Europe than in the US. Finally, by modelling the elasticity of substitution between ICT and labour as a function of institutional and structural variables, we find that it correlates with the share of routine occupations (positively) and with the share of high-skill workers (negatively)." (Author's abstract, IAB-Doku) ((en))

Keywords: Einkommensverteilung - internationaler Vergleich; Lohnquote; technischer Wandel - Auswirkungen; Substitutionseffekte; Substitutionselastizität; qualifikationsspezifische Faktoren; Personaleinstellung; Kosten - Auswirkungen; Personalbeschaffung; Beschäftigungseffekte; Österreich; Dänemark; Spanien; Frankreich; Bundesrepublik Deutschland; Irland; Italien; Niederlande; USA (search for similar items in EconPapers)
JEL-codes: E02 E25 J30 J64 O33 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2017-09-11
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Working Paper: The Trend in Labour Income Share: the Role of Technological Change and Imperfect Labour Markets (2017) Downloads
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