"The labour income share and the relative price of investment in the US" by Edouard Wemy
 

Economics

The labour income share and the relative price of investment in the US: an empirical investigation

Document Type

Article

Abstract

Several studies argue that the recent decline in the secular trend of the labour income share is mostly driven by capital-embodied technological progress which is typically identified with trend reductions in the relative price of investment. In this paper, I use data from the United States to assess the nature of the relationship between trends in the labour share and the relative price of investment. Results from co-integration tests reveal that the share and the relative price of investment are most likely not co-integrated. However, co-variation tests indicate that both time series share a common stochastic component, and additional tests of structural breaks point at the presence of a common change in the mean or trend of both series. These results suggest that capital-embodied or investment-specific technological progress may have played an important role in the decline of the secular trend of the labour share.

Publication Title

Applied Economics

Publication Date

9-14-2019

Volume

51

Issue

43

First Page

4711

Last Page

4725

ISSN

0003-6846

DOI

10.1080/00036846.2019.1597254

Keywords

growth, investment-specific technological change, labor share, time series

Link to Full Text

Share

COinS