Template-Type: ReDIF-Paper 1.0

Author-Name: Francesco Carbonero
Author-X-Name-First: Francesco 
Author-X-Name-Last: Carbonero

Author-Name: Christian Offermanns
Author-X-Name-First: Christian 
Author-X-Name-Last: Offermanns

Author-Name: Enzo Weber
Author-X-Name-First: Enzo
Author-X-Name-Last: Weber

Title: The Trend in Labour Income Share: the Role of Technological Change and Imperfect Labour Markets

	
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 ICT-labour 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).

Length: 24 pages
Creation-Date:  2017-09
File-URL: http://www.bgpe.de/texte/DP/173_CarboneroOffermannsWeber.pdf
File-Format: Application/pdf
File-Function: First version, 2017
Number: 173
Classification-JEL: 
Keywords: 
Handle: RePEc:bav:wpaper:173_CarboneroOffermannsWeber