In this second part of our study we survey the rapidly expanding empirical literature on the determinants of the functional distribution of income. Three major strands emerge: technological change, international trade, and financialization. All contribute to the fluctuations of the labor share,...

This series of working papers explores a theme enjoying a tremendous resurgence: the functional distribution of income - the division of aggregate income by factor share. This first installment surveys some landmark theories of income distribution. Some provide a technology-based account of the...

One of the most significant stylized facts in the U.S. economy since the 1970s has been the decline in the share of national income accruing to labor. Many recent studies have sought to explain this trend, with most explanations focusing on structural changes such as deindustrialization,...

In the United States, labor's share of income falls after a positive disturbance to productivity growth or inflation, and it remains low for some time. Previous researchers have argued that the negative relationship between productivity growth and labor's share is puzzling. I argue otherwise. A...

This paper investigates determinants of changes of the labor share in developed countries with a focus on Western Europe. Using a country-industry panel that covers the private sector, the paper focuses on long and short-run changes within industries. The results show a large and time-persistent...

We model the design of labor market institutions in an economy characterized by moral hazard and irreversible investment. In this setting the institutional design affects the bargaining power of labor. At the optimum, the allocation of bargaining power balances the aforementioned frictions. We...

This paper investigates determinants of changes of the labor share in developed countries with a focus on Western Europe. Using a country-industry panel that covers the private sector, the paper focuses on long and short-run changes within industries. The results show a large and time-persistent...

This paper assesses empirically the hypotheses by Bental and Demougin (2010) that innovations in ICT (Information and Communication Technology) reduce the labor share in OECD countries by improving the monitoring technology. In a first step, I show that data trends for the labor share, wages in...