We consider a decentralized version of the neoclassical growth model where labor share is chosen by workers to maximize their long run (permanent) wages. In this framework, if the labor share increases relative to the competitive share, workers capture a larger share of a smaller total income in...

We explore the relationship between union density and labor’s shares using panel data on 35 industries, spanning the entire US economy, for the years 1983 through 2005. For the full sample, a standard deviation increase in union density (membership or coverage rates) is associated with an...

The relative stability of aggregate labor share constitutes one of the great macroeconomic ratios. However, relative stability at the aggregate level masks the unbalanced nature of sectoral labor shares. We present a two-sector (manufacturing and services) model with induced innovation that can...

Krueger (1999) provides a measure of ‘raw’ labour's share for the US post-war economy based on Mincerian regressions. He finds that raw labour's share fell by over 8 percentage points from 1959 to 1996. We provide an alternative estimate using direct observations on the wage rates of raw...

We consider a decentralized version of the neoclassical growth model where labor share is chosen by workers to maximize their long run (permanent) wages. In this framework, if the labor share increases relative to the competitive share, workers capture a larger share of a smaller total income in...

We use annual data on capital’s share and relative factor prices from 35 US industries from 1960 to 2005 to test the induced innovation hypothesis. We derive, from a production function framework, testable implications for the effect of contemporaneous and lagged factor price ratios on...

The relative stability of aggregate labor's share constitutes one of the great macroeconomic ratios. However, relative stability at the aggregate level masks the unbalanced nature of sectoral labor's shares. We present a two-sector (manufacturing and services) model with induced innovation that...

We use annual data on capital´s share and relative factor prices from 35 US industriesfrom 1960 to 2005 to test the induced innovation hypothesis. We derive, from a productionfunction framework, testable implications for the effect of contemporaneous and lagged factorprice ratios on capital´s...

Measuring labor's share of an economy's aggregate income seems straightforward,at least in principle. Count up wage and salary income, along with the value of benefitsprovided to employees, and divide it by total income. However, one fundamentalconcept of labor's share in macroeconomic theory is...

The relative stability of aggregate labor's share constitutes one of the great macroeconomic ratios. However, relative stability at the aggregate level masks the unbalanced nature of industry labor's shares - the Kuznets stylized facts underlie those of Kaldor. We present a two-sector - one...