{"title":"Capitalization of intellectual property products does not explain the decline in the labor share","authors":"Simcha Barkai , Suresh Nallareddy , Maria Ogneva","doi":"10.1016/j.red.2024.101268","DOIUrl":null,"url":null,"abstract":"<div><div>We reevaluate the role of the capitalization of Intellectual Property Products (IPP) in the decline in the labor share. Using the same aggregate U.S. data as <span><span>Koh et al. (2020)</span></span>, we show that the labor share has clearly declined in recent decades and that this decline does not depend on the capitalization of IPP. The approach of KSLZ, which estimates a linear time trend for the period 1929–2018, conflates a gradual and long-run increase in IPP investment with a decline in the labor share in recent decades. In addition, in both aggregate and industry data, we show that the increase in the rate of IPP investment is nearly fully offset by depreciation. As a consequence, the labor share of net value added and its decline in recent decades are insensitive to IPP capitalization.</div></div>","PeriodicalId":47890,"journal":{"name":"Review of Economic Dynamics","volume":"56 ","pages":"Article 101268"},"PeriodicalIF":2.3000,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Review of Economic Dynamics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1094202524000577","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
We reevaluate the role of the capitalization of Intellectual Property Products (IPP) in the decline in the labor share. Using the same aggregate U.S. data as Koh et al. (2020), we show that the labor share has clearly declined in recent decades and that this decline does not depend on the capitalization of IPP. The approach of KSLZ, which estimates a linear time trend for the period 1929–2018, conflates a gradual and long-run increase in IPP investment with a decline in the labor share in recent decades. In addition, in both aggregate and industry data, we show that the increase in the rate of IPP investment is nearly fully offset by depreciation. As a consequence, the labor share of net value added and its decline in recent decades are insensitive to IPP capitalization.
期刊介绍：
Review of Economic Dynamics publishes meritorious original contributions to dynamic economics. The scope of the journal is intended to be broad and to reflect the view of the Society for Economic Dynamics that the field of economics is unified by the scientific approach to economics. We will publish contributions in any area of economics provided they meet the highest standards of scientific research.
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