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OECD Statistics Working Papers

The OECD Statistics Working Paper Series - managed by the OECD Statistics and Data Directorate – is designed to make available in a timely fashion and to a wider readership selected studies prepared by staff in the Secretariat or by outside consultants working on OECD projects. The papers included are of a technical, methodological or statistical policy nature and relate to statistical work relevant to the organisation. The Working Papers are generally available only in their original language - English or French - with a summary in the other.

Joint Working Paper

Measuring Well-being and Progress in Countries at Different Stages of Development: Towards a More Universal Conceptual Framework (with OECD Development Centre)

Measuring and Assessing Job Quality: The OECD Job Quality Framework (with OECD Directorate for Employment, Labour and Social Affairs)

Forecasting GDP during and after the Great Recession: A contest between small-scale bridge and large-scale dynamic factor models (with OECD Economics Directorate)

Decoupling of wages from productivity: Macro-level facts (with OECD Economics Directorate)

Which policies increase value for money in health care? (with OECD Directorate for Employment, Labour and Social Affairs)

Compiling mineral and energy resource accounts according to the System of Environmental-Economic Accounting (SEEA) 2012 (with OECD Environment Directorate)

English

Has the Labour Share Declined?

It Depends

We revisit the issue of how best to measure the labour and capital shares in OECD economies, distinguishing between production- and income-based perspectives. The former adopts a producer perspective with gross income as a reference: it uses a production function in a market setting. The latter adopts a consumer perspective with net income as a reference, taking account of depreciation and including taxes and subsidies as perceived by final consumers. We confirm a statistically significant but small decline in the labour share across OECD countries over the past two decades under a production perspective. But this appears to result mainly from a rise in the gross capital share caused by rising depreciation rates. Accordingly, we find little or no decline in the labour share under an income perspective, where income is measured net and after depreciation. Using a novel dataset from Korea, we further dissect the capital share and suggest that in periods of price bubbles of land, rising asset values are a key element behind rising capital shares. We also show how introducing land prices can explain how both labour shares and real prices of investment goods can decline without assuming a large elasticity of substitution between labour and capital.

English

Keywords: functional distribution, labour share, capital share
JEL: D33: Microeconomics / Distribution / Factor Income Distribution
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