LocationRoom BZ E4.23, Universitätsplatz 1 - Piazza Università, 1, 39100 Bozen-Bolzano
Departments Press and Events
research seminar:“The labor share decline: new empirical evidence”
Francesco Furlanetto, Norges Bank
LocationRoom BZ E4.23, Universitätsplatz 1 - Piazza Università, 1, 39100 Bozen-Bolzano
Departments Press and Events
We estimate a structural vector autoregressive(SVAR) model in order
to quantify four of the main explanations forthe decline of the US labor income
share: (i) rising market power of firms, (ii)falling market power of workers, (iii)
higher investment specific technology growth,and (iv) the widespread emergence
of automation or robotization in productionprocesses. Identification is achieved
with theory robust sign restrictions imposed atmedium to long run horizons. The
restrictions are derived from a stylizedmacroeconomic model of structural change.
Across specifications we find that automationis the main driver of the long run labor
share. Firms’ rising markups can, however,account for a significant part of the
accelerating labor share decline observed inthe last 20 years. Our results also point
to complementarity between labor and capital,thus, ruling out capital deepening
as a major force behind declining labor shares.If anything we find the opposite:
investment specific technology growth has ledto a mild increase of the labor income
share in our sample.