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Has the Labour Share Declined?: It Depends


  • Taehyoung Cho

    (Bank of Korea)

  • Soobin Hwang

    (Bank of Korea)

  • Paul Schreyer



We revisit the issue of how best to measure the labour and capital shares in OECD economies, distinguishing between production- and income-based perspectives. The former adopts a producer perspective with gross income as a reference: it uses a production function in a market setting. The latter adopts a consumer perspective with net income as a reference, taking account of depreciation and including taxes and subsidies as perceived by final consumers. We confirm a statistically significant but small decline in the labour share across OECD countries over the past two decades under a production perspective. But this appears to result mainly from a rise in the gross capital share caused by rising depreciation rates. Accordingly, we find little or no decline in the labour share under an income perspective, where income is measured net and after depreciation. Using a novel dataset from Korea, we further dissect the capital share and suggest that in periods of price bubbles of land, rising asset values are a key element behind rising capital shares. We also show how introducing land prices can explain how both labour shares and real prices of investment goods can decline without assuming a large elasticity of substitution between labour and capital.

Suggested Citation

  • Taehyoung Cho & Soobin Hwang & Paul Schreyer, 2017. "Has the Labour Share Declined?: It Depends," OECD Statistics Working Papers 2017/1, OECD Publishing.
  • Handle: RePEc:oec:stdaaa:2017/1-en

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    Cited by:

    1. repec:sls:ipmsls:v:32:y:2017:3 is not listed on IDEAS
    2. Anna M. Stansbury & Lawrence H. Summers, 2017. "Productivity and Pay: Is the link broken?," NBER Working Papers 24165, National Bureau of Economic Research, Inc.

    More about this item


    capital share; functional distribution; labour share;

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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