IS LABOR'S LOSS CAPITAL'S GAIN? GROSS VERSUS NET LABOR SHARES

By Benjamin Bridgman. Macroeconomic Dynamics, 2017

120 citations recorded by the source corpus.

US labor share has been falling since the 1970s. I show that it has not fallen as much once items that do not add to capital, depreciation and production taxes, are netted out. Recent net labor share is within its historical range, whereas gross share is at its lowest level. This effect holds for other high-income economies. The overall picture is no longer one of unprecedented, globally declining labor share. Using gross share as a proxy for net share can give misleading results. US gross share and inequality are correlated, whereas net share, the correct measure, is not.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/c8a71326dd8c718af2ff203c4e031edd602c5395

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Citations in the corpus

• The Fall of the Labor Share and the Rise of Superstar Firms* (2017, background): “…controversy over the degree to which the fall in the labor share of GDP is due to measurement issues such as the treatment of capital depreciation (Bridgman 2014), housing (Rognlie 2015), self-employment (Gollin 2002; Elsby, Hobijn, and Sahin 2013), intangible capital (Koh, Santaeulalia-Lopis,…”
• The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data (2018, background): “…globalization of trade and production (Elsby et al. 2013; Boehm et al., 2017; Dao et al., 2017; measurement issues (Rognlie, 2015; Koh et al., 2016; Bridgman, 2017); and labor market institutions (Bentolila and Saint-Paul, 2003; Ciminelli et al. 2018); but much less so on the role of capital…”
• The Elusive Explanation for the Declining Labor Share (2021, background): “In contrast, as noted by Bridgman (2018) and Rognlie (2015), the net labor share had been rising between 1940 and 1980, so the recently lower level is not without precedent.”
• Capital Shares and Income Inequality: Evidence from the Long Run (2018, unknown): “This question has been discussed by several authors, for example, Andrew Glyn (2009), Benjamin Bridgman (2014), Piketty (2014), and Karabarbounis and Neiman (2014b).”
• Labor Share Decline and Intellectual Property Products Capital (2020, unknown): “Finally, while we have not attempted to link LS and economic inequality (see recent discussions in Bridgman (2014), Krusell and Smith (2014) and Karabarbounis and Neiman (2014b)), our result that IPP capital is behind the LS decline suggests that theories that aim at jointly explaining the LS declin”
• Offshore Profit Shifting and Domestic Productivity Measurement (2017, methodology): “Clausing (2016) uses her estimates to compute forgone tax revenues, while our focus is on measurement in the real economy. Our focus is on the reduction in measured domestic productivity. In related work, Maffini and Mokkas (2011) study the increase in measured affiliate productivity that is the res”