Abstract
It is widely acknowledged that a secular decline in the labor share has been underway around the world since the early 1980s. We document a sustained break in this trend following the global financial crisis. This holds for a majority of countries and is robust to different methods, measurements and aggregation procedures. When grouped by level of development, labor shares have stabilized in advanced and risen in developing economies since 2008. A novel application of the standard neoclassical growth model links this differential evolution to stronger increases in the growth of capital–output ratios in developing relative to advanced economies.
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