Labor’s share of national income has been declining since the 1980s. In this article, Dao and al. attribute this decline to a) technology and b) global integration. But are these explanations satisfactory?
Drivers of Declining Labor Share of Income
By: Mai Chi Dao, Mitali Das, Zsoka Koczan, Weicheng Lian – IMF
Another explanation: Monopoly power
Autor and al do not agree with the thesis that cheaper technology has substituted workers within companies. Instead, they argue, labor share is falling across the whole economy: in advanced economies there has been a shift of resources away from small companies that are labor intensive and towards a few large companies that are very capital-intensive. Hence monopoly power is the cause for labor decline.
Concentrating on the Fall of the Labor Share
Authors: David Autor, David Dorn, Lawrence Katz, Christina Patterson, John Van Reenen
From: MIT – University of Zurich – Harvard University
Combining globalization and monopoly power
Mechanization and globalization tend to improve the productivity of capital-intensive companies. Production then shifts towards these firms and in the process wages decrease. But it’s only a handful of superstar multinationals that can build automated plants and outsource production to China.
Robot Geometry (must read)
By: Paul Krugman – City University of New York
