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A Reversal in the Global Decline of the Labor Share?

Author

Listed:
  • Selen Andic
  • Michael Christopher Burda

Abstract

It is widely acknowledged that a secular decline in the labor share has been underway around the world since the early 1980s. We document a sustained break in this trend following the global financial crisis. This holds for a majority of countries and is robust to different methods, measurements and aggregation procedures. When grouped by level of development, labor shares have stabilized in advanced and risen in developing economies since 2008. A novel application of the standard neoclassical growth model links this differential evolution to stronger increases in the growth of capital-output ratios in developing relative to advanced economies.

Suggested Citation

  • Selen Andic & Michael Christopher Burda, 2021. "A Reversal in the Global Decline of the Labor Share?," Working Papers 2127, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:2127
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2021/21-27
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    Cited by:

    1. Alai Yeerken & Feng Deng, 2023. "Digital Service Trade and Labor Income Share—Empirical Research on 48 Countries," Sustainability, MDPI, vol. 15(6), pages 1-19, March.
    2. Yating Dai & Jian Cheng & Daolin Zhu, 2022. "Understanding the Impact of Land Supply Structure on Low Consumption: Empirical Evidence from China," Land, MDPI, vol. 11(4), pages 1-18, April.
    3. González-Rozada, Martín & Ruffo, Hernán, 2024. "Do trade agreements contribute to the decline in labor share? Evidence from Latin American countries," World Development, Elsevier, vol. 177(C).
    4. Wang, Minglu & Pan, Yifan & Jing, Peng, 2025. "Balancing economic growth and pension adequacy: The combined effects of contribution rate reduction and retirement age postponement," International Review of Economics & Finance, Elsevier, vol. 102(C).

    More about this item

    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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