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The productivity slowdown and the labour income share

In: Handbook on Labour Markets in Transition

Author

Listed:
  • Patrice Ollivaud
  • Cyrille Schwellnus

Abstract

Productivity growth in most advanced economies has slowed significantly over the past five decades. The negative impact on real wage growth has been amplified by declines in labour income shares, which have been particularly pronounced during the period 1983-2007. This chapter analyses labour share developments using a combination of country, industry and firm-level data. Technological change in the investment goods-producing sector and greater global value chain participation have tended to compress labour shares, but the effects have been significantly less pronounced in Japan and most European countries than in the United States. Firm-level evidence suggests that declines in labour shares reflect technological dynamism rather than anti-competitive forces. Policies that raise human capital through education and training play a crucial role to broaden the sharing of productivity gains by ensuring that workers can make the most of ongoing technological advances.

Suggested Citation

  • Patrice Ollivaud & Cyrille Schwellnus, 2024. "The productivity slowdown and the labour income share," Chapters, in: Stéphane Carcillo & Stefano Scarpetta (ed.), Handbook on Labour Markets in Transition, chapter 3, pages 55-72, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:19758_3
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    File URL: https://www.elgaronline.com/doi/10.4337/9781839106958.00009
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