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Why Is Labor Receiving a Smaller Share of Global Income? Theory and Empirical Evidence
Author:
Mai Dao null

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Ms. Mitali Das
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Zsoka Koczan
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Weicheng Lian null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 169
Language:
English
Publication Date:
24 Jul 2017
DOI:
https://doi.org/10.5089/9781484311042.001
ISBN:
9781484311042
ISSN:
1018-5941
Pages:
70
Keywords:
WP; income share; share of income; advanced economy; labor share; routinization; automation; global value chains; shift-share analysis; developing economy; labor share decline; low-labor-share sector; labor share dynamics; Emerging and frontier financial markets; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper documents the downward trend in the labor share of global income since the early 1990s, as well as its heterogeneous evolution across countries, industries and worker skill groups, using a newly assembled dataset, and analyzes the drivers behind it. Technological progress, along with varying exposure to routine occupations, explains about half the overall decline in advanced economies, with a larger negative impact on middle-skilled workers. In emerging markets, the labor share evolution is explained predominantly by global integration, particularly the expansion of global value chains that contributed to raising the overall capital intensity in production.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund