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Human Capitalists

In: NBER Macroeconomics Annual 2022, volume 37

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  • Andrea L. Eisfeldt
  • Antonio Falato
  • Mindy Z. Xiaolan

Abstract

The widespread and growing use of equity-based compensation has transformed high-skilled labor from a pure labor input to a class of “human capitalists.” High-skilled labor earns substantial income in the form of equity claims to firms’ future dividends and capital gains. Equity-based compensation has increased substantially since the 1980s, representing thirty-six percent of total compensation to high-skilled labor in US manufacturing in recent years. Ignoring equity income causes incorrect measurement of the returns to high-skilled labor, with substantial effects on macroeconomic trends. In manufacturing, the inclusion of equity-based compensation almost eliminates the decline in the high-skilled labor share, and reduces the total decline in the labor share by about one-third. Only by including equity pay does our structural estimation support complementarity between high-skilled labor and physical capital greater than that of Cobb and Douglas (1928). We also provide additional regression evidence of such complementarity.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Andrea L. Eisfeldt & Antonio Falato & Mindy Z. Xiaolan, 2022. "Human Capitalists," NBER Chapters, in: NBER Macroeconomics Annual 2022, volume 37, pages 1-61, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14666
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    More about this item

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • G3 - Financial Economics - - Corporate Finance and Governance

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