Dividing the Pie: The Determinants of Labor's Share of Income on the Firm Level

KOF Working Paper No. 352

50 Pages Posted: 22 Feb 2014

See all articles by Michael Siegenthaler

Michael Siegenthaler

ETH Zürich - KOF Swiss Economic Institute

Tobias Stucki

ETH Zürich - Swiss Institute for Business Cycle Research

Date Written: February 21, 2014

Abstract

This paper is the first to study the factors determining labor’s share of income on the level of the individual firm, employing an unusually informative panel data set. The empirical examination is concerned with Switzerland which stands out as one of the very few developed countries with a stable labor share. Broadly confirming results from previous cross-country and industry-level studies, we find that the main factor decreasing the labor share in the estimation period is the increase in the share of workers using ICT in the firm. The main reasons why Switzerland’s labor share remained almost constant are its relatively slow-rate of technological progress and shifts towards industries with above-average labor shares.

Keywords: Labor share, factor income distribution, firm-level analysis

JEL Classification: D33, E25, J24, O30

Suggested Citation

Siegenthaler, Michael and Stucki, Tobias, Dividing the Pie: The Determinants of Labor's Share of Income on the Firm Level (February 21, 2014). KOF Working Paper No. 352, Available at SSRN: https://ssrn.com/abstract=2399436 or http://dx.doi.org/10.2139/ssrn.2399436

Michael Siegenthaler (Contact Author)

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Tobias Stucki

ETH Zürich - Swiss Institute for Business Cycle Research ( email )

Weinbergstrasse 35
ETH Zentrum
Zurich 8092, 8092
Switzerland

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