IDEAS home Printed from https://ideas.repec.org/a/bla/manchs/v94y2026i5p547-564.html

Capital Composition and the Declining Labor Share

Author

Listed:
  • Maya Eden
  • Paul Gaggl

Abstract

There are two problems with the view that cheaper capital caused a decline in the labor share: first, aggregate capital and labor are gross complements; second, the price of capital is roughly constant, worldwide. Taking seriously the composition of capital resolves both challenges. Though information and communications (ICT) capital is a small fraction of capital, it is highly substitutable with labor, and its user cost declined sharply. Distinguishing ICT and non‐ICT capital is empirically plausible and suggests that automation accounts for more than 1/4 of the global decline in the labor share, even if aggregate capital and labor are complements.

Suggested Citation

  • Maya Eden & Paul Gaggl, 2026. "Capital Composition and the Declining Labor Share," Manchester School, University of Manchester, vol. 94(5), pages 547-564, September.
    • Handle: RePEc:bla:manchs:v:94:y:2026:i:5:p:547-564
    DOI: 10.1111/manc.70040
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/manc.70040
    Download Restriction: no
    File URL: https://libkey.io/10.1111/manc.70040?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:manchs:v:94:y:2026:i:5:p:547-564. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/semanuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.