The productivity slowdown and the declining labor share: a neoclassical exploration
Grossman, Gene M. ; Helpman, Elhanan ; Oberfield, Ezra ; Sampson, Thomas
London School of Economics and Political Science. Centre for Economic Performance
LSE - London
2017
11 p.
productivity ; labour market ; technological change
CEP Discussion Paper
1504
Production management
English
Bibliogr.
"We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early post-war period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the US labor share. "
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