Since the mid-1980s, the US labour share declined considerably, and the economy reallocated towards sectors with high labour shares. Previous studies claim such reallocation has not offset any of the labour share’s fall, so aggregate movements should be understood solely as a within-sector phenomenon.
By exploiting a decomposition method that explicitly accounts for co-movements in sectoral labour shares and sectoral weights, reallocation offsets -47% of the decline. Previous studies have the number at around 4%.
My findings help reconcile why earlier studies have presented mechanisms explaining the decline in the labour share many times over.
Registration
If you would like to schedule a meeting with her on Wednesday afternoon or Friday before the seminar, or if you’d like to join for dinner on Thursday evening or lunch on Friday, please send an email to boring@ese.eur.nl.
