Labor Income Share

For a long time the share of national income accruing to labour was considered as highly stable (almost like a constant) within countries, although it could vary significantly between countries. However, as from early 2000s, the share has declined in many countries, which gave rise to a discussion of possible explanations for the decline. This has focused on three, not necessarily mutually exclusive, factors: (i) technological change, (ii) institutions, especially weakened bargaining power of labour, and (iii) globalization and the relocation of routine tasks and jobs performed by in particular unskilled workers. It should be noted that there is some debate about whether the observed decline is also due to difficulties in measuring the labour income share.