Dec 11, 2013

The Global Decline of the Labor Share

This is also highly technical paper. But the point it makes is interesting and worrisome  The paper argues that economies have been going through a process where labor has been substituted by capital since the 1970s. The Internet, new technologies, etc., are making it cheaper to employ more capital and less labor for production. A graph from the paper:
The paper is forthcoming in the prestigious Quarterly Journal of Economics. It is by Loukas Karabarbounis and Brent Neiman, and the title is "The Global Decline of the Labor Share." The question is what is happening or going to happen to the labor left outside the economy? That is a hard question and we might see more inequality. Which is actually one of the points in Tyler Cowen's book Average is Over

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