The Decline in Capital Efficiency and Labour Share

Bibliographic Data

ID9726970
AuthorsFernando del Río (0000-0001-7448-5045, Universidade de Santiago de Compostela), Francisco‐Xavier Lores (0000-0003-1597-4062, Universidade de Santiago de Compostela)
Year2019
Volume86
Issue344
Pages635-662
Publication date2019-10-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12279
OpenAlexW2885175136
LanguageEN
Citations received4
References cited37

We calibrate and simulate a neoclassical growth model with a variable elasticity of substitution production function and three types of technological change: labour‐augmenting, capital‐augmenting and investment‐specific. In this framework, we find that the decline in US labour share was caused by a large decline in capital efficiency, which led to a decrease in the ratio of effective capital to effective labour in a context in which capital and labour are gross complements. Moreover, the decline in the relative price of investment contributed to reducing the fall in US labour share, while the increase in the economic depreciation rate of US fixed assets accounted for a small reduction in US labour share

Capital (architecture) · Capital deepening · Capital formation · Context (archaeology) · Depreciation (economics) · Economics · Elasticity of substitution · Financial capital · Fixed capital · Human capital · Investment (military) · Labour economics · Macroeconomics · Market economy · Monetary economics · Production (economics) · Relative price · Economic Growth and Productivity · Economic theories and models · Economic Theory and Policy

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