2014 CapitalDepreciationandLaborShar

Subject Headings: Labor Share Measure, Gross Labor Share, Net Labor Share.

Notes

The labor share is typically measured as compensation to labor relative to gross value added (" gross labor share "), in part because gross value added is more directly measured than net value added. Labor compensation relative to net value added ("net labor share ") may be more important in some settings, however, because depreciation is not consumed. In this paper we make three contributions. First, we document that gross and net labor shares generally declined together in most countries around the world over the past four decades. Second, we use a simple economic environment to show that declines in the price of capital necessarily cause gross and net labor shares to move in the same direction, whereas other shocks such as a decline in the real interest rate may cause the net labor share to rise when the gross labor share falls. Third, we illustrate that whether the gross or the net labor share is a more useful proxy for inequality during an economy's transition depends sensitively on the nature of the underlying shocks that hit the economy.

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	Author	volume	Date Value	title	type	journal	titleUrl	doi	note	year
2014 CapitalDepreciationandLaborShar	Loukas Karabarbounis Brent Neiman			Capital Depreciation and Labor Shares Around the World: Measurement and Implications