Technology, intangible assets and the decline of the labor share

O'Mahony, Mary, Vecchi, Michela ORCID logoORCID: https://orcid.org/0000-0002-0129-6769 and Venturini, Francesco (2019) Technology, intangible assets and the decline of the labor share. Discussion Paper. Economic Statistics Centre of Excellence (ESCoE), London. . [Monograph]

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Abstract

We investigate the decline of the labor share in a world characterized by rapid technological changes and increasing heterogeneity of capital assets. Our theoretical model allows for these assets to affect the labor share in different directions depending on the capital-labor substitution/complementary relationship and the workers' skill level. We test the predictions of our model using a large cross-country, cross-industry data set, considering different forms of tangible and intangible capital inputs. Our results show that, over the 1970-2007 period, the decline of the labor share has been mainly driven by technical change and Information and Communication Technology (ICT) assets, mitigated by increasing investments in R&D-based knowledge assets. Extending to other forms of intangible capital from 1995 onwards, we find that intangible investments related to innovation increase the labor share while those related to the organisation of firms contribute to its decline, particularly for the low and intermediate skilled workers. Our results are robust to an array of econometric issues, namely heterogeneity, cross-sectional dependence, and endogeneity

Item Type: Monograph (Discussion Paper)
Additional Information: ESCoE Discussion Paper 2019-17 (ESCoE DP 2019-17)
ISSN 2515-4664
Research Areas: A. > Business School > Economics
Item ID: 27811
Notes on copyright: © Mary O’Mahony, Michela Vecchi and Francesco Venturini.
The published paper is reproduced in this repository with permission of Economic Statistics Centre of Excellence (ESCoE)
Useful Links:
Depositing User: Michela Vecchi
Date Deposited: 16 Oct 2019 10:11
Last Modified: 13 Jun 2022 21:09
URI: https://eprints.mdx.ac.uk/id/eprint/27811

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