Technology, Intangible Assets and the Decline of the Labor Share
Mary O'Mahony (),
Michela Vecchi () and
Francesco Venturini ()
Economic Statistics Centre of Excellence (ESCoE) Discussion Papers from Economic Statistics Centre of Excellence (ESCoE)
We investigate the decline of the labor share in a world characterized by rapid technological changes and increasing heterogeneity of capital assets. Our theoretical model allows for these assets to affect the labor share in different directions depending on the capital-labor substitution/complementary relationship and the workers’ skill level. We test the predictions of our model using a large cross-country, cross-industry data set, considering different forms of tangible and intangible capital inputs. Our results show that, over the 1970-2007 period, the decline of the labor share has been mainly driven by technical change and Information and Communication Technology (ICT) assets, mitigated by increasing investments in R&D based knowledge assets. Extending to other forms of intangible capital from 1995 onwards, we find that intangible investments related to innovation increase the labor share while those related to the organisation of firms contribute to its decline, particularly for the low and intermediate skilled workers. Our results are robust to an array of econometric issues, namely heterogeneity, cross sectional dependence, and endogeneity.
Keywords: labor shares; technological change; ICT capital; intangible capital (search for similar items in EconPapers)
JEL-codes: C23 E24 E25 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-ict, nep-ino, nep-mac and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://escoe-website.s3.amazonaws.com/wp-content/ ... ESCoE-DP-2019-17.pdf
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nsr:escoed:escoe-dp-2019-17
Access Statistics for this paper
More papers in Economic Statistics Centre of Excellence (ESCoE) Discussion Papers from Economic Statistics Centre of Excellence (ESCoE) 2 Dean Trench Street Smith Square London SW1P 3HE. Contact information at EDIRC.
Bibliographic data for series maintained by ESCoE Centre Manager ().