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THE U.S. LABOR INCOME SHARE AND AUTOMATION SHOCKS
Author(s) -
Charalampidis Nikolaos
Publication year - 2020
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12829
Subject(s) - economics , indexation , wage share , investment (military) , wage , monetary economics , labour economics , monetary policy , macroeconomics , econometrics , efficiency wage , politics , political science , law
The causes and consequences of the 1964–2016 swings in the U.S. labor income share/labor share (LS) are parsed through the lens of a structural model estimated on aggregate and LS series jointly. Where conventional models fall short, the present model yields a counter‐cyclical LS unconditionally and in response to demand and monetary policy shocks, as well as a small wage pro‐cyclicality, via moderate wage indexation. Shifts in automation, workers' market power, investment efficiency, and the relative price of investment account for 54%, 24%, 6%, and 4% of LS fluctuations, respectively. Automation shocks explain the lion's share of the post‐2007 cyclical LS tumble and 11% of output cycles, and generate a distinctive counter‐cyclical labor response. ( JEL E32, E25, E52)