Salle 3001

Paraskevi PAPPA (Universidad Carlos III de Madrid) “Understanding the Transatlantic Divide in Labor Income Shares”

Abstract: This paper analyzes medium-to-long-term labor share trends in the US and major Euro Area countries from 1960 using a panel vector autoregression model with common trends and theory-based sign restrictions. We find distinct patterns across the Atlantic: Europe saw a rise in labor share until the 1980s, followed by a large decline over the next two decades, stabilizing at a lower level after 2000. In contrast, the US experienced a sharp decline starting in 2000. In Europe, labor market institutions, like higher bargaining power of workers, before the 1980s and increased labor supply thereafter—explain the decline. In the US, labor-saving technological factors, particularly automation, rather than globalization, have played a key role in the labor share decline. 

Joint work : Drago Bergholt, Francesco Furlanetto, Nicolo Maffei-Faccioli and