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The Productivity Slowdown and the Declining Labor Share

Gene Grossman (), Elhanan Helpman, Ezra Oberfield () and Thomas Sampson
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Thomas Sampson: LSE

No 169, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early postwar period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the U.S. labor share.

New Economics Papers: this item is included in nep-dge, nep-gro and nep-ltv
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:169

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