Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/180152
Authors: 
Carbonero, Francesco
Offermanns, Christian
Weber, Enzo
Year of Publication: 
2017
Series/Report no.: 
BGPE Discussion Paper 173
Abstract: 
The non-constancy of factor shares is drawing the attention of many researchers. We document an average drop of the labour share of 8 percentage points for eight European countries and the US between 1980 and 2007. We investigate theoretically and empirically two mechanisms: the substitution between Information Communication Technology (ICT) and labour and the presence of hiring costs. We find that the ICTlabour replacement is a promising channel to explain the decline of the labour share, though labour market frictions takes part of its explanatory power over. In particular, hiring costs have a bigger role in Europe than in the US. Finally, by modelling the elasticity of substitution between ICT and labour as a function of institutional and structural variables, we find that it correlates with the share of routine occupations (positively) and with the share of high-skill workers (negatively).
Document Type: 
Working Paper

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