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One of the things we know that ain't so: Is US labor's share relatively stable?

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  • Young, Andrew T.

Abstract

Solow (1958) argued that, from 1929 to 1954, US aggregate labor's share was not stable relative to what we would expect given individual industry labor's shares. I confirm and extend this result using data from 1958 to 1996 that includes 35 industries (roughly two-digit SIC level) and spans the entire US economy. Changes in industry shares in total value-added are essentially unrelated to aggregate labor's share movements. Industry labor's shares comovements contribute positively to aggregate labor's share movements. These findings give us a clearer perspective on one of the stylized facts of economic growth. If the great macroeconomic ratio is meaningful, it must be interpreted in terms of long-run, offsetting shifts in "services" industries versus "goods" industries, both in terms of their labor's shares and shares in total value-added. At least at an annual frequency, there is nothing particularly stable about aggregate labor's share.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 32 (2010)
Issue (Month): 1 (March)
Pages: 90-102

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Handle: RePEc:eee:jmacro:v:32:y:2010:i:1:p:90-102

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Web page: http://www.elsevier.com/locate/inca/622617

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Keywords: Labor' s share Factor shares Income distribution Great ratio Balanced growth Economic growth;

References

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Citations

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Cited by:
  1. Charpe, Matthieu & Kühn, Stefan, 2012. "Bargaining, Aggregate Demand and Employment," Dynare Working Papers 13, CEPREMAP.
  2. Hernando Zuleta, 2008. "Factor Saving Innovations and Factor Income Shares," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 836-851, October.
  3. Michael Siegenthaler & Tobias Stucki, 2014. "Dividing the Pie: the Determinants of Labor’s Share of Income on the Firm Level," KOF Working papers 14-352, KOF Swiss Economic Institute, ETH Zurich.
  4. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sectoral Level," IEHAS Discussion Papers 0803, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  5. Chi, Wei & Xiaoye, Qian, 2011. "Regional disparity of labor’s share in China: Evidence and explanation," MPRA Paper 34522, University Library of Munich, Germany.
  6. Dennis, Benjamin N. & Iscan, Talan B., 2009. "Engel versus Baumol: Accounting for structural change using two centuries of U.S. data," Explorations in Economic History, Elsevier, vol. 46(2), pages 186-202, April.
  7. Luciano Boggio & Vincenzo Dall'Aglio & Marco Magnani, 2009. "On Labour Shares in Recent Decades: A Survey," DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi itemq0957, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  8. George Backus & Thomas Lowry & Drake Warren, 2013. "The near-term risk of climate uncertainty among the U.S. states," Climatic Change, Springer, vol. 116(3), pages 495-522, February.
  9. Hernando Zuleta, 2007. "Biased technological change, human capital and factor shares," DOCUMENTOS DE TRABAJO 004380, UNIVERSIDAD DEL ROSARIO.
  10. Willis, Geoff, 2011. "Why money trickles up – wealth & income distributions," MPRA Paper 30851, University Library of Munich, Germany.
  11. Geoff Willis, 2011. "The Bowley Ratio," Papers 1105.2123, arXiv.org.
  12. Hernando Zuleta & Andrew T. Young, 2007. "Labor's shares – aggregate and industry: accounting for both in a model of unbalanced growth with induced innovation," DOCUMENTOS DE TRABAJO 003105, UNIVERSIDAD DEL ROSARIO.
  13. Askenazy, P. & Cette, G. & Maarek, P., 2012. "Rent building, rent sharing - A panel country-industry empirical analysis," Working papers 369, Banque de France.

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