Increasing and Decreasing Labor Shares: Cross-Country Differences in the XXI Century


We describe the behavior of the labor share in the corporate sector for twenty OECD countries over the first 15 years of the XXI century. Our first finding is that the OECD labor share -a cross-country average- is trendless over this medium-run horizon after adjusting for the labor income generated from IPP rents as in Koh et al. (2017). Second, we find that the behavior of the labor share is largely heterogeneous across countries over this period. Indeed, the corporate labor share significantly increases for equally as many countries (e.g., France, Italy and the United Kingdom) as it decreases (e.g., Germany, Israel and the United States) over this period. Third, a decomposition of the corporate labor share behavior into that of its components shows that the cross-country differences in labor share trends are mainly driven by the differences in labor productivity growth and not wages.