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A decomposition of the labor share decline in the US business sector

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Abstract

Based on the calibration of a simple model, we decompose the decline in the labor share into four structural components: task displacement, labor rents, capital rents, and labor-capital substitution effect. Our estimation suggests that task displacement and the switch of distributed rents from labor to capital are the main drivers of the labor share decline over the past three decades. On the other hand, the neoclassical substitution effect seems not to have a long term impact on the labor share.

Suggested Citation

  • Guillaume Bazot & David Guerreiro, 2025. "A decomposition of the labor share decline in the US business sector," AMSE Working Papers 2503, Aix-Marseille School of Economics, France.
    • Handle: RePEc:aim:wpaimx:2503
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    More about this item

    Keywords

    labor share; task displacement; automation; labor rents; capital rents; markup; rate of return on capital; productivity;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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