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Knowledge Capital Accumulation, Household Student Debt, and the Labor Share in the Social Product: Evidence for the United States

Author

Listed:
  • Marina da Silva Sanches

  • Gustavo Pereira Serra

  • Gilberto Tadeu Lima

Abstract

This paper analyzes the dynamic relationships among knowledge capital accumulation (measured by the share of the population completing college) household student indebtedness, and the functional distribution of income between labor and non-labor in the U.S. over the period 2003-2019. Drawing on the Neo-Kaleckian demand-led framework in the Cambridge, U. K. tradition, it tests the hypotheses that rising student debt exerts downward pressure on labor income, while knowledge capital accumulation mitigates this effect. Despite an expanding theoretical literature, empirical evidence on these dynamic interactions remains severely limited. Using a Vector Autoregression (VAR) framework, the study finds that increases in student debt reduce the labor share primarily through lower real wages, with no significant effect on labor productivity. In contrast, knowledge capital accumulation increases the labor share and contributes to a reduction in student debt. Overall, the results underscore that real wage and labor share determination is shaped by institutional and conflict-distributional factors, thereby supporting policy measures aimed at reducing household student indebtedness, strengthening collective bargaining, and expanding publicly funded education.

Suggested Citation

  • Marina da Silva Sanches & Gustavo Pereira Serra & Gilberto Tadeu Lima, 2026. "Knowledge Capital Accumulation, Household Student Debt, and the Labor Share in the Social Product: Evidence for the United States," Working Papers, Department of Economics 2026_03, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2026wpecon3
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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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