You are here: Home / Papers / OECD Social, Employment and Migration Working Papers / Capital's Grabbing Hand? A Cross-Country/Cross-Industry Analysis of the Decline of the Labour Share
- ISSN :
- 1815-199X (online)
- DOI :
This series is designed to make available to a wider readership selected labour market, social policy and migration studies prepared for use within the OECD. Authorship is usually collective, but principal writers are named. The papers are generally available only in their original language - English or French - with a summary in the other.
Capital's Grabbing Hand? A Cross-Country/Cross-Industry Analysis of the Decline of the Labour ShareClick to Access:
- Andrea Bassanini1, Thomas Manfredi1
- Author Affiliations
- 1: OECD, France
- 04 July 2012
- Bibliographic information
We examine the determinants of the within-industry decline of the labour share, using industry-level annual data for 25 OECD countries, 20 business-sector industries and covering up to 28 years. We find that total factor productivity growth – which captures (albeit imprecisely) capital-augmenting or labour-replacing technical change – and capital deepening jointly account for as much as 80% of the within-industry contraction of the labour share. We also find that other important factors are privatisation of state-owned enterprises and the increase in international competition as well as off-shoring of intermediate stages of the production process. By contrast, we are unable to detect any effect from increases in domestic competition brought about by entry deregulation.
- JEL Classification:
- I30: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / General