Examining the Trend of Labor Shares in Developing Economies

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Date: February 24, 2022
Time: 12:30 p.m. - 2:00 p.m.
Location: Virtual event
Category: Seminar

Zhe Zhu

Assistant Professor
Department of Economics
Wayne State University

Title: Examining the Trend of Labor Shares in Developing Economies

Abstract:  According to Kaldor facts, labor share of national income has long been considered constant between 60%-70%. However, it is now well-documented that labor shares in advanced economies have declined over the last few decades. This propose a question for developing economies: is this trend the same for developing economies? If not, are we going to expect the same trend to happen to developing economies as they catch up with advanced economies in development? I find that evidence is mixed for developing countries. In certain countries or areas, there is a general decline of labor share, in line with the observation in developed economies, whereas in other regions labor share is roughly constant. After correcting several measurement errors, results show that increased markups contributed greatly to the decline in labor shares.

February 2022
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