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LABOR SHARE AND GROWTH IN THE LONG RUN

Published online by Cambridge University Press:  27 March 2019

Matthieu Charpe,
Slim Bridji and
Peter Mcadam
Matthieu Charpe
Affiliation:
International Labour Organization
Slim Bridji
Affiliation:
HES-SO, University of Applied Sciences and ArtsWestern Switzerland
Peter Mcadam*
Affiliation:
European Central Bank
*
Address correspondence to: Peter McAdam, Directorate General Research, European Central Bank, Sonnemannstrasse 20, 60314 Frankfurt am Main, Germany. e-mail: peter.mcadam@ecb.int.
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Abstract

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This paper establishes some stylized facts of the long-run relationship between growth and labor shares using historical data for the USA (1898–2010), the United Kingdom (1856–2010), and France (1896–2010). Performing individual country time–frequency analysis, we demonstrate the existence of long-term cycles in labor share of 30–50 years explaining a major part of the variance in the data. Further, the impact of labor share on growth changes sign with the frequency considered from negative at high frequencies to positive at low frequencies. Finally, the positive coefficient associated with the labor share at low frequencies increases over time.

Keywords

Labor ShareGrowthIncome DistributionWavelet Analysis

Information

Type
Articles
Information
Macroeconomic Dynamics , Volume 24 , Issue 7 , October 2020, pp. 1720 - 1757
Copyright
© Cambridge University Press 2019

Footnotes

We thank two anonymous referees and the Associate Editor, as well as Philippe Askenazy, Larry Ball, Samuel Bentolila, Florence Jaumotte, Gino Gancia, James Ramsey, Rainer Klump, Martin Ravallion, Etienne Wasmer and Alpo Willman for useful comments as well as audiences at the 9th International Conference on “Computational and Financial Econometrics” at the University of London, in particular Luis Aguiar-Conraria, and at the University of Bielefeld.

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