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Perspectives on the Labor Share

Author

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  • Loukas Karabarbounis

Abstract

As of 2022, the share of US income accruing to labor is at its lowest level since the Great Depression. Updating previous studies with more recent observations, I document the continuing decline of the labor share for the United States, other countries, and various industries. I discuss how changes in technology and product, labor, and capital markets affect the trend of the labor share. I also examine its relationship with other macroeconomic trends, such as rising markups, higher concentration of economic activity, and globalization. I conclude by offering some perspectives on the economic and policy implications of the labor share decline.

Suggested Citation

  • Loukas Karabarbounis, 2024. "Perspectives on the Labor Share," Journal of Economic Perspectives, American Economic Association, vol. 38(2), pages 107-136, Spring.
    • Handle: RePEc:aea:jecper:v:38:y:2024:i:2:p:107-36
    DOI: 10.1257/jep.38.2.107
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    References listed on IDEAS

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    1. Andrew B. Abel & N. Gregory Mankiw & Lawrence H. Summers & Richard J. Zeckhauser, 1989. "Assessing Dynamic Efficiency: Theory and Evidence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(1), pages 1-19.
    2. Matthias Kehrig & Nicolas Vincent, 2021. "The Micro-Level Anatomy of the Labor Share Decline," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(2), pages 1031-1087.
    3. Susanto Basu, 2019. "Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 3-22, Summer.
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    Cited by:

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    2. David Autor & Caroline Chin & Anna M. Salomons & Bryan Seegmiller, 2026. "What Makes New Work Different from More Work?," NBER Working Papers 34986, National Bureau of Economic Research, Inc.
    3. Jaime Arellano-Bover & Carolina Bussotti & Matteo Paradisi & Liangjie Wu, 2026. "The Labor Demand Implications of Brand Capital: Evidence from Trademark Transactions," RFBerlin Discussion Paper Series 26079, ROCKWOOL Foundation Berlin (RFBerlin).
    4. Bandyopadhyay, Sujan & Ferraro, Domenico, 2025. "Persistence of labor share fluctuations and overshooting," Journal of Economic Dynamics and Control, Elsevier, vol. 180(C).
    5. Lindsay Jacobs & Bilge Mutlu & Robert Radwin & Timothy Smeeding, 2026. "Cobots as Workforce Partners: Overcoming Barriers Through Policy Opportunities," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 45(1), January.
    6. Jiyoon Oh, 2025. "The Micro-Level Anatomy of Korea’s Rising Labor Share," Korean Economic Review, Korean Economic Association, vol. 41, pages 175-210.
    7. Hennessy, David A., 2025. "Information as a catalyst for industrialization," Journal of Economic Behavior & Organization, Elsevier, vol. 230(C).
    8. Schiozer, Nikolas & Lima, Gilberto Tadeu & Alexandre, Michel, 2026. "Heterogeneity in pricing behavior in hybrid DSGE-ABM macrodynamics," Economic Modelling, Elsevier, vol. 155(C).
    9. David Autor & B. N. Kausik, 2026. "Resolving the automation paradox: falling labor share, rising wages," Papers 2601.06343, arXiv.org.
    10. Masayuki MORIKAWA, 2025. "Are Productivity and Wages Decoupling in Japan? Divergence between macro and micro relationships," Discussion papers 25106, Research Institute of Economy, Trade and Industry (RIETI).
    11. Simcha Barkai & Surech Nallareddy & Maria Ogneva, 2025. "Capitalization of Intellectual Property Products Does Not Explain the Decline in the Labor Share," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 56, April.
    12. Garibaldi, Pietro & Turri, Enrico D., 2024. "Monopsony in Growth Theory," IZA Discussion Papers 17392, IZA Network @ LISER.
    13. Tingqing Ye, 2026. "Analysis of labor income share in China with uncertain regression model," Fuzzy Optimization and Decision Making, Springer, vol. 25(1), pages 135-145, March.
    14. German Bender, 2025. "Challenging the Hypothesis of Neoliberal Convergence in Industrial Relations: The Swedish Conundrum," British Journal of Industrial Relations, London School of Economics, vol. 63(4), pages 667-680, December.
    15. Vahagn Jerbashian, 2026. "On the elasticity of substitution between labor and ICT and IP capital and traditional capital," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 60, April.
    16. Sivasathivel Kandasamy, 2026. "GAGI: A Gini-Adjusted GDP-per-Capita Index for Distribution-Aware Macroeconomic Welfare Monitoring," Papers 2606.09944, arXiv.org.
    17. Hansen-Lewis, Jamie, 2026. "Air pollution and manufacturing productivity: Understanding the roles of technology and adaptation," Journal of Development Economics, Elsevier, vol. 179(C).
    18. Cheng, Rui & Li, Jing & Wu, Ting, 2024. "Competition policy and labor income share: Evidence from the antitrust policy in China," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 966-977.

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    More about this item

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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