The productivity slowdown and the declining labor share: a neoclassical exploration

TitleThe productivity slowdown and the declining labor share: a neoclassical exploration
Publication TypeJournal Article
Year of Publication2017
AuthorsGrossman G, Helpman E, Obersfield E, Sampson T, Oberfield E, Sampson T
JournalMimeo
Pagination1–51
KeywordsEconomic Fluctuations and Growth
AbstractWe 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 postwar 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 U.S. labor share.
URLhttp://www.nber.org/papers/w23853 http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12342
DOI10.3386/w23853