“The Global Decline of the Labor Share”
Abstract
The stability of the labor share of income is a key foundation in macroeconomic models. We document, however, that the global labor share has significantly declined since the early 1980s, with the decline occurring within the large majority of countries and industries. We show that the decrease in the relative price of investment goods, often attributed to advances in information technology and the computer age, induced firms to shift away from labor and toward capital. The lower price of investment goods explains roughly half of the observed decline in the labor share, even when we allow for other mechanisms influencing factor shares, such as increasing profits, capital-augmenting technology growth, and the changing skill composition of the labor force. We highlight the implications of this explanation for welfare and macroeconomic dynamics.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
Much research documents a decline in the share of GDP going to labor in many nations over recent decades.
“Much research documents a decline in the share of GDP going to labor in many nations over recent decades (e.g., Blanchard, 1997; Elsby, Hobjin and Sahin, 2013; Karabarbounis and Neiman, 2013; Piketty 2014).”
From The Fall of the Labor Share and the Rise of Superstar Firms* (2020) · cites this paper as Karabarbounis and Neiman, 2013
Cites
Blanchard, O. J., Nordhaus, W. D., & Phelps, E. S. (1997) · Brookings Papers on Economic Activity · doi:10.2307/2534687 · Cited by 588 · cited 2× · see citing works
“Blanchard and Giavazzi (2003) argue that deregulation in product and labor”
Flagged first, then by citations
Cited by
Sorted by citations
Acemoglu, D., & Restrepo, P. (2018) · American Economic Review · doi:10.1257/aer.20160696 · Cited by 3,121 · see citing works
The Fall of the Labor Share and the Rise of Superstar Firms*
Autor, D., Dorn, D., Katz, L. F., Patterson, C., & Van Reenen, J. (2020) · The Quarterly Journal of Economics · doi:10.1093/qje/qjaa004 · Cited by 2,206 · see citing works
The rise of market power and the macroeconomic implications
De Loecker, J., Eeckhout, J., & Unger, G. (2020) · The Quarterly Journal of Economics · doi:10.1093/qje/qjz041 · Cited by 1,893 · see citing works
Tasks, automation, and the rise in U.S. wage inequality
Acemoglu, D., & Restrepo, P. (2022) · Econometrica · doi:10.3982/ecta19815 · Cited by 715 · see citing works
De Loecker, J., & Eeckhout, J. (2018) · doi:10.3386/w24768 · Cited by 308 · see citing works
Challenges to Mismeasurement Explanations for the US Productivity Slowdown
Syverson, C. (2017) · Journal of Economic Perspectives · doi:10.1257/jep.31.2.165 · Cited by 302 · see citing works
The Changing Economics of Knowledge Production
Abis, S., & Veldkamp, L. (2023) · The Review of Financial Studies · doi:10.1093/rfs/hhad059 · Cited by 167 · see citing works
“Why Is Labor Receiving a Smaller Share of Global Income? Theory and Empirical Evidence”
Dao, M., Das, M., Koczan, Z., & Lian, W. (2017) · IMF Working Papers · doi:10.5089/9781484311042.001 · Cited by 144 · see citing works
How can robots affect wage inequality?
Lankisch, C., Prettner, K., & Prskawetz, A. (2019) · Economic Modelling · doi:10.1016/j.econmod.2018.12.015 · Cited by 129 · see citing works
“The Micro-Level Anatomy of the Labor Share Decline”
Kehrig, M., & Vincent, N. (2018) · doi:10.3386/w25275 · Cited by 39 · see citing works
Walras–Bowley Lecture: Market Power and Wage Inequality
Deb, S., Eeckhout, J., Patel, A., & Warren, L. (2024) · Econometrica · doi:10.3982/ecta21157 · Cited by 28 · see citing works
- Authors
- Karabarbounis, L., & Neiman, B.
- Affiliations
- University of Chicago (US)
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 2013-10-24
- Volume
- 129
- Issue
- 1
- Pages
- 61-103
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2155379226
- Cited by
- 2,152
- References
- 1
- Citations by year
- 2026: 184 · 2025: 196 · 2024: 189 · 2023: 181 · 2022: 192 · 2021: 230 · 2020: 219 · 2019: 182 · 2018: 166 · 2017: 138 · 2016: 123 · 2015: 91 · 2014: 43 · 2013: 13 · 2012: 3
- FWCI
- 247.74
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Quarterly Journal of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Keywords
- wage share, declining labor share, factor shares, investment goods prices, capital-labor substitution, information technology, computerization, profit, welfare effects, macroeconomic dynamics
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
