Gene Grossman, Elhanan Helpman, Ezra Oberfield, Thomas Sampson, 11 November 2017

Many countries have experienced both a slowdown in aggregate productivity growth and a decline in labour’s share of national income in recent years. This column argues that the productivity slowdown may have caused the decline in labour’s income. Calibrating the authors’ model to US data suggests that a one percentage point decline in the productivity growth rate accounts for between half and all of the observed decline in the US labour share.

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