A Reversal in the Global Decline of the Labor Share?

Selen Andic and Michael Burda

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: It is widely acknowledged that a secular decline in the labor share has been underway around the world since the early 1980s. We document a sustained break in this trend following the global financial crisis. This holds for a majority of countries and is robust to different methods, measurements and aggregation procedures. When grouped by level of development, labor shares have stabilized in advanced and risen in developing economies since 2008. A novel application of the standard neoclassical growth model links this differential evolution to stronger increases in the growth of capital-output ratios in developing relative to advanced economies.

Keywords: Labor income share; Functional income distribution; Capital-output ratio; Capital-labor ratio (search for similar items in EconPapers)
JEL-codes: E22 E25 O11 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-mac and nep-ore
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Citations: View citations in EconPapers (3)

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Journal Article: A reversal in the global decline of the labor share? (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2127

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