Reference : Explaining the Decline in the US Labor Share: Taxation and Automation DEM Discussion ...
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Business & economic sciences : Macroeconomics & monetary economics
http://hdl.handle.net/10993/45262
Explaining the Decline in the US Labor Share: Taxation and Automation DEM Discussion Paper 20-2020, University of Luxembourg
English
Irmen, Andreas mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) >]
Heer, Burkhard mailto [University of Augsburg > Department of Economcis]
Süssmuth, Bernd mailto [University of Leipzig > Department of Economcs]
2020
DEM Discussion Paper 20-2020, University of Luxembourg
No
[en] Functional income distribution ; labor income share ; income taxes ; automation capital ; demography ; growth
[en] This study provides evidence for the US that the secular decline in the labor share is not only explained by technical change or globalization, but also by the dynamics of factor taxation, automation capital, and population growth. First, we empirically find indications of co-integration for the 1974-2008 period. Permanent effects on factor shares emanate from relative factor taxation. The latter also have a lasting effect on the use of robots. Variance decompositions reveal that taxing contributes to changes in the two income shares and in automation capital. Second, we analyse and calibrate a neoclassical growth model extended to include factor taxation, automation capital, and capital adjustment costs. The model is able to replicate the dynamics of the observed functional income distribution in the US during the 1965-2015 period. Counterfactual experiments suggest that the fall in the labor share would have been significantly smaller if labor and capital income tax rates had remained at their respective level of the 1960s.
Researchers ; Professionals
http://hdl.handle.net/10993/45262
https://ideas.repec.org/p/luc/wpaper/20-20.html

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