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Home | Events Archive | The Missing Reallocation Effect? Decomposing the Declining Labour Share
Seminar

The Missing Reallocation Effect? Decomposing the Declining Labour Share

  • Location
    Erasmus University Rotterdam, E building, Kitchen/Lounge E1
    Rotterdam
  • Date and time

    November 02, 2023
    12:00 - 13:00

Abstract: Since the mid-1980s the US labour share declined considerably and the economy reallocated towards sectors with high labour shares, mainly in services. Previous studies claim reallocation towards these sectors has not affected the overall labour share, so aggregate movements should be understood solely as a within-sector phenomenon. By exploiting a decomposition method that accounts for co-movements in sectoral labour shares and reallocation, I recover a positive effect: reallocation mitigates the decline in the labour share. The finding has measurement and welfare implications for the causes of the shifting distribution of income.