The Productivity Slowdown and the Declining Labor Share: A Neoclassical Exploration

Arbeitspapier

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 à la Ben Porath (1967) and capital-skill complementarity à 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6714

Classification and Topics

• Classification: Wirtschaft ; Economic Growth and Aggregate Productivity: General
• Subject: neoclassical growth ; balanced growth ; technological progress ; capital-skill complementarity ; labor share ; capital share

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grossman, Gene ; Helpman, Elhanan ; Oberfield, Ezra ; Sampson, Thomas
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/172990
• Last update: 10.03.2025, 11:43 AM CET