Skip to main content
    • Aa
    • Aa


  • Benjamin Bridgman (a1)

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.

Corresponding author
Address correspondence to: Benjamin Bridgman, US Department of Commerce, Bureau of Economic Analysis, Washington, DC 20230, USA; e-mail:
Hide All

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.

Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Daron Acemoglu and James A. Robinson (2015) The rise and fall of general laws of capitalism. Journal of Economic Perspectives 29, 328.

Reshad N. Ahsan and Devashish Mitra (2014) Trade liberalization and labor's slice of the pie: Evidence from Indian firms. Journal of Development Economics 108, 116.

Facundo Alvaredo , Anthony B. Atkinson , Thomas Piketty , and Emmanuel Saez (2013) The top 1 percent in international and historical perspective. Journal of Economic Perspectives 27, 320.

David H. Autor , David Dorn , and Gordon H. Hanson (2015) Untangling trade and technology: Evidence from local labor markets. Economic Journal 125, 621646.

Olivier Blanchard and Francesco Giavazzi (2003) Macroeconomic effects of regulation and deregulation in goods and labor markets. Quarterly Journal of Economics 118, 879907.

Nicholas Bloom , Mirko Draca , and John Van Reenen (2016) Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity. Review of Economic Studies 83, 87117.

Ricardo J. Caballero and Mohamad L. Hammour (1998) Jobless growth: Appropriability, factor substitution, and unemployment. Carnegie-Rochester Conference Series on Public Policy 48, 5194.

Andrea Colciago and Lorenza Rossi (2015) Firm dynamics, endogenous markups and the labor share of income. Macroeconomic Dynamics 19, 13091331.

Carol Corrado , Charles Hulten , and Daniel Sichel (2005) Measuring capital and technology: An expanded framework. In C. Corrado , J. Haltiwanger , and D. Sichel (eds.), Measuring Capital in the New Economy, pp. 1141. Chicago: University of Chicago Press.

Partha Dasgupta (2009) The welfare economic theory of green national accounts. Environmental and Resource Economics 42, 338.

C. E. Ferguson and R. Moroney John (1969) The sources of change in labor's relative share: A neoclassical analysis. Southern Economic Journal 35, 308322.

Jordi Gali and Mark Gertler (1999) Inflation dynamics: A structural econometric analysis. Journal of Monetary Economics 44, 195222.

Douglas Gollin (2002) Getting income shares right. Journal of Political Economy 110, 458474.

George Hondroyiannis , P. A. V. B. Swamy , and George S. Tavlas (2009) New Keynesian Phillips curve in a time-varying coefficient environment: Some European evidence. Macroeconomic Dynamics 13, 149166.

Charles R. Hulten (1992) Accounting for the wealth of nations: The net versus gross output controversy and its ramifications. Scandinavian Journal of Economics 94 (Supplement), 924.

Douglas H. Joines (1981) Estimates of effective marginal tax rates on factor incomes. Journal of Business 54, 191226.

Charles I. Jones (2015) The macroeconomics of Piketty. Journal of Economic Perspectives 29, 2946.

Nicholas Kaldor (1957) A model of economic growth. Economic Journal 67, 591624.

Loukas Karabarbounis and Brent Neiman (2014b) The global decline of the labor share. Quarterly Journal of Economics 129, 61103.

Per Krusell and Anthony Smith (2015) Is Piketty's ‘Second Law of Capitalism’ fundamental? Journal of Political Economy 123, 725748.

Per Krusell , Lee E. Ohanian , Jose-Victor Rios-Rull , and Giovanni L. Violante (2000) Capital-skill complementarity and inequality: A macroeconomic analysis. Econometrica 68, 10291053.

Martina Lawless and Karl T. Whelan (2011) Understanding the dynamics of labor shares and inflation. Journal of Macroeconomics 33, 121136.

Ellen McGrattan and Edward C. Prescott (2014) A reassessment of real business cycle theory. American Economic Review Papers and Proceedings 104, 177182.

Hao Qi (2014) The labor share question in China. Monthly Review 65 (8), 2335.

Jose-Victor Rios-Rull and Raul Santaeulalia-Llopis (2010) Redistributive shocks and productivity shocks. Journal of Monetary Economics 57, 931948.

Enchuan Shao and Pedro Silos (2014) Accounting for the cyclical dynamics of income shares. Economic Inquiry 52, 778795.

Martin L. Weitzman (1976) On the welfare significance of national product in a dynamic economy. Quarterly Journal of Economics 90, 156162.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *



Full text views

Total number of HTML views: 0
Total number of PDF views: 9 *
Loading metrics...

Abstract views

Total abstract views: 36 *
Loading metrics...

* Views captured on Cambridge Core between 11th July 2017 - 27th July 2017. This data will be updated every 24 hours.