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Perspectives on the Labor Share

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  • Loukas Karabarbounis

Abstract

As of 2022, the share of U.S. income accruing to labor is at its lowest level since the Great Depression. Updating previous studies with more recent observations, I document the continuing decline of the labor share for the United States, other countries, and various industries. I discuss how changes in technology and product, labor, and capital markets affect the trend of the labor share. I also examine its relationship with other macroeconomic trends, such as rising markups, higher concentration of economic activity, and globalization. I conclude by offering some perspectives on the economic and policy implications of the labor share decline.

Suggested Citation

  • Loukas Karabarbounis, 2023. "Perspectives on the Labor Share," Working Papers 800, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmwp:97393
    DOI: 10.21034/wp.800
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    References listed on IDEAS

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    1. Andrew B. Abel & N. Gregory Mankiw & Lawrence H. Summers & Richard J. Zeckhauser, 1989. "Assessing Dynamic Efficiency: Theory and Evidence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(1), pages 1-19.
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    More about this item

    Keywords

    Inequality; Production; Labor share;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • D20 - Microeconomics - - Production and Organizations - - - General

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