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Grossman, Gene
Helpman, Elhanan
Oberfield, Ezra
Sampson, Thomas
Year of Publication: 
Series/Report no.: 
CESifo Working Paper 6714
We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation à la Ben Porath (1967) and capital-skill complementarity à la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early postwar period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the U.S. labor share.
neoclassical growth
balanced growth
technological progress
capital-skill complementarity
labor share
capital share
Document Type: 
Working Paper

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