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The Declining Labor Share of Income

Author

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  • Rodriguez Francisco

    (Bank of America, NY, USA)

  • Jayadev Arjun

    (Economics Department, University of Massachusetts Boston, 100 Morrisey Boulevard, Boston, MA 02125, USA)

Abstract

We use two separate panel datasets, one at the economy-wide level and one for the manufacturing sector alone to examine trends in the labor share over the last three decades. Both datasets show that labor shares have decreased, starting from about 1980, in most regions of the world. This finding is robust to adjustments for self-employment as well as adjustments for the unbalanced panel structure of both datasets. Furthermore, we present evidence that as a first approximation, this decrease is driven by declines in intra-sector labor shares as opposed to movements in activity towards sectors with lower labor shares. Finally, we show that global labor share at the economy wide level has been falling.

Suggested Citation

  • Rodriguez Francisco & Jayadev Arjun, 2013. "The Declining Labor Share of Income," Journal of Globalization and Development, De Gruyter, vol. 3(2), pages 1-18, March.
    • Handle: RePEc:bpj:globdv:v:3:y:2013:i:2:p:1-18:n:3
    DOI: 10.1515/jgd-2012-0028
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    More about this item

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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