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Staff working papers

Can Capital Deepening Explain the Global Decline in Labor’s Share?

Staff Working Paper 2019-3 Andrew Glover, Jacob Short
We estimate an aggregate elasticity of substitution between capital and labor near or below one, which implies that capital deepening cannot explain the global decline in labor's share. Our methodology derives from transition paths in the neo-classical growth model.
Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, International topics, Labour markets JEL Code(s): E, E1, E13, E2, E22, E25, J, J3

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Journal publications

  • “Can Capital Deepening Explain the Global Decline in Labor's Share?”
    (with Andy Glover), Review of Economic Dynamics, 35 (2020), pp. 35-53.​
  • “Non-traded goods, factor market frictions, and international capital flows”
    (with Jacek Rothert), Forthcoming at Review of Economic Dynamics​