The Decline in the Labor Share: Evidence from Japanese Manufacturers f Panel Data

Koyo Miyoshi

Discussion papers from Policy Research Institute, Ministry of Finance Japan

Abstract: This paper replicates Kehrig and Vincent (2021) using Japanese data and tests whether the overall labor share decline is led by an increase in low-laborshare firms. The results can be summarized as follows. The overall labor share in Japan declined until around 2006, but then rose during the recession in 2008 and then leveled off. The results of this paper are similar to the results shown in Autor et al. (2020) and Kehrig and Vincent (2018) for the United States in the following points. First, although the labor share of median firms did not rise while the overall labor share was declining, the rate of decline in the labor share of the median firm was slower than the overall rate of decline. Second, the valueadded share of firms with a low labor share increased while their salary share did not increase when the overall labor share declined. Third, entry and exit are not important to the decline in overall labor share, as in the United States. The results of this paper differ from Autor et al. (2020) and Kehrig and Vincent (2018) in the following points. First, the role of firms with an extremely low labor share, say under decile, which is a good explanation of the change in labor share in the United States, is limited in Japan. Second, the change in actual labor share is very similar to ġąi,initialăit, the product of the initial value-added share and labor share at the time, which suggests that firms with a large value-added share are lowering their labor share in Japan.

Keywords: Labor; share (search for similar items in EconPapers)
JEL-codes: D33 F16 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2021-05
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https://www.mof.go.jp/pri/research/discussion_paper/ron340.pdf First version, 2016 (application/pdf)

Related works:
Journal Article: The decline in the labor share: Evidence from Japanese manufacturers’ panel data (2024)
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