Abstract
Documenting an average drop of the labor share of eight percentage points for eight European countries and the US between 1980 and 2007, we analyze the role of technological progress and labor market frictions. According to our results, while capital-labor substitution in general was not crucial, Information Communication Technology (ICT) explains more than half of the decline in the labor share, given an estimated elasticity of substitution with the labor input of 1.18. Considering hiring costs slightly dampens the estimated substitution effect at aggregate level. Additionally, by modeling the substitution between ICT and labor with a set of key labor market variables, we find it to be linked to both the share of routine occupations (positively) and the share of high-skill workers (negatively) with a similar strength.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.