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

Published online by Cambridge University Press:  11 July 2017

Benjamin Bridgman
Benjamin Bridgman*
Affiliation:
Bureau of Economic Analysis
*
Address correspondence to: Benjamin Bridgman, US Department of Commerce, Bureau of Economic Analysis, Washington, DC 20230, USA; e-mail: Benjamin.Bridgman@bea.gov.
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Abstract

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.

Keywords

Labor ShareDepreciationTaxesInequality

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Type
Articles
Information
Macroeconomic Dynamics , Volume 22 , Issue 8 , December 2018 , pp. 2070 - 2087
Copyright
Copyright © Cambridge University Press 2017 

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Footnotes

I thank Berthold Herrendorf, Bart Hobijn, Loukas Karabarbounis, Aubhik Khan, Brent Neiman, Erick Sager, Julia Thomas and seminar participants at the BEA/Census Research Conference, Bureau of Labor Statistics, Midwest Macro Meetings in St. Louis, NBER Summer Institute, and the Ohio State for comments. The views expressed in this paper are solely those of the author and not necessarily those of the US Bureau of Economic Analysis or the US Department of Commerce.

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