Endogenous Labor Share Cycles: Theory and Evidence
Jakub Growiec (),
Peter McAdam and
No 2016-015, Working Papers from Warsaw School of Economics, Collegium of Economic Analysis
Based on long US time series we document a range of empirical properties of the labor's share of GDP. We identify its substantial medium-to-long run, pro-cylical swings and show that most of its variance lies beyond business-cycle frequencies. We explore the extent to which these empirical regularities can be explained by a calibrated micro-founded, nonlinear growth model with normalized CES technology and endogenous labor- and capital augmenting technical change driven by purposeful directed R&D investments. We demonstrate that dynamic macroeconomic trade-offs created by arrivals of both types of new technologies can lead to prolonged swings in the labor share (and other model variables) due to oscillatory convergence to the balanced growth path as well as emergence of limit cycles via Hopf bifurcations. Both predictions are consistent with the empirical evidence.
Keywords: Labor income share; Endogenous cycles; Factor-augmenting endogenous technical change; R&D; CES; Normalization. (search for similar items in EconPapers)
JEL-codes: E25 E32 O33 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg, nep-gro and nep-mac
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Journal Article: Endogenous labor share cycles: Theory and evidence (2018)
Working Paper: Endogenous labor share cycles: theory and evidence (2015)
Working Paper: Endogenous Labor Share Cycles: Theory and Evidence (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:sgh:kaewps:2016015
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