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Labour Share Developments in OECD Countries Over the Past Two Decades

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Listed:
  • Mathilde Pak
  • Pierre-Alain Pionnier
  • Cyrille Schwellnus

Abstract

[eng] Over the past two decades, real wage growth in many OECD countries has decou¬pled from labour productivity growth, as labour income shares have declined. This paper analyses the drivers of labour share developments using a combination of industry- and firm-level data. Technological change in the investment goods-producing sector and greater global value chain participation have compressed labour shares, but the effect of technological change has been significantly less pronounced for high-skilled workers. Countries with falling labour shares have witnessed both a decline at the technological frontier and a reallocation of market shares toward “superstar” firms with low labour shares. The decline at the technological frontier mainly reflects the entry of firms with low labour shares into the frontier rather than a decline of labour shares in incumbent frontier firms, suggesting that thus far this process is mainly explained by technological dynamism rather than anti-competitive forces.

Suggested Citation

  • Mathilde Pak & Pierre-Alain Pionnier & Cyrille Schwellnus, 2019. "Labour Share Developments in OECD Countries Over the Past Two Decades," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 510-511-5, pages 17-34.
    • Handle: RePEc:nse:ecosta:ecostat_2019_510t_4
    DOI: https://doi.org/10.24187/ecostat.2019.510t.1992
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    References listed on IDEAS

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    1. Lordan, Grace & Neumark, David, 2018. "People versus machines: The impact of minimum wages on automatable jobs," Labour Economics, Elsevier, vol. 52(C), pages 40-53.
    2. Pierre-Alain Pionnier & Emmanuelle Guidetti, 2015. "Comparing profit shares in value-added in four OECD countries: Towards more harmonised national accounts," OECD Statistics Working Papers 2015/3, OECD Publishing.
    3. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    5. Mathilde Pak & Cyrille Schwellnus, 2019. "Labour share developments over the past two decades: The role of public policies," OECD Economics Department Working Papers 1541, OECD Publishing.
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    Citations

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    Cited by:

    1. Arif, Imran, 2021. "Productive knowledge, economic sophistication, and labor share," World Development, Elsevier, vol. 139(C).
    2. Mary O’Mahony & Michela Vecchi & Francesco Venturini, 2021. "Capital Heterogeneity and the Decline of the Labour Share," Economica, London School of Economics and Political Science, vol. 88(350), pages 271-296, April.
    3. Philippe Askenazy, 2022. "Worker surveillance capital, labour share, and productivity [Workplace surveillance: an overview]," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 85-93.
    4. Caroline Buts & Ellen Van Droogenbroeck & Michaël R. J. Dooms & Kim Willems, 2020. "The Economic Impact of Standards in Belgium," International Journal of Standardization Research (IJSR), IGI Global, vol. 18(1), pages 44-64, January.
    5. Anatolijs Prohorovs & Julija Bistrova, 2022. "Labour Share Convergence in the European Union," Economies, MDPI, vol. 10(9), pages 1-21, August.
    6. Philippe Askenazy, 2020. "Worker surveillance capital, labour share and productivity [Surveillance des travailleurs, partage de valeur ajoutée et productivité]," Working Papers hal-02877703, HAL.

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    More about this item

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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