Explaining the labor share: automation vs labor market institutions

Luis Guimarães and Pedro Gil

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we build a theoretical model to study the effects of automation and labor market institutions on the labor share. In our model, firms choose between two technologies: an automated technology and a manual technology. In this context, the labor share reflects both the average wage level (versus output) and the distribution of firms between the two technologies. Our model offers three main insights. First, automation-augmenting shocks reduce the labor share but increase employment and wages. Second, labor market institutions (relative to automation) play an almost insignificant role in explaining the labor share. Third, our model suggests that the US labor share only (clearly) falls after the late 1980’s because of a contemporaneous acceleration of automation’s productivity.

Keywords: Automation; Labor Share; Technology Choice; Employment; Labor-Market Frictions (search for similar items in EconPapers)
JEL-codes: E24 J64 L11 O33 (search for similar items in EconPapers)
Date: 2019-01-20
New Economics Papers: this item is included in nep-gro, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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https://mpra.ub.uni-muenchen.de/92062/1/MPRA_paper_92062.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/94235/1/MPRA_paper_92062.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/94236/1/MPRA_paper_94236.pdf revised version (application/pdf)

Related works:
Journal Article: Explaining the Labor Share: Automation Vs Labor Market Institutions (2022)
Working Paper: Explaining the labor share: automation vs labor market institutions (2019)
Working Paper: Explaining the labor share: automation vs labor market institutions (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:92062

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