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Development and sectoral labor income shares

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  • Schaefer, Daniel

Abstract

The macroeconomic literature assumes that sectoral labor income shares and output per person are uncorrelated across countries. This paper shows that the data reject this assumption for a large set of countries. The labor shares of the manufacturing and market services sectors systematically increase with output per person relative to those of other sectors, leading to a shift of labor income across sectors with economic development. The empirical evidence suggests that capital deepening and cross-sector differences in the degree of capital-labor substitutability may be important for understanding these patterns. Researchers can directly use the provided dataset of labor shares to calibrate macroeconomic models.

Suggested Citation

  • Schaefer, Daniel, 2026. "Development and sectoral labor income shares," Macroeconomic Dynamics, Cambridge University Press, vol. 30, pages 1-1, January.
    • Handle: RePEc:cup:macdyn:v:30:y:2026:i::p:-_31
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