Revisiting the Global Decline of the (Non-Housing) Labor Share

Abstract

We identify two undocumented measurement challenges affecting corporate sector labor shares outside the United States: the inclusion of dwellings and the inclusion of self-employed workers in the corresponding sectoral accounts. Both issues have become more important over time, biasing corporate labor shares downward. We propose two methods to correct for these challenges and obtain 'true' non-housing labor share series. Contrary to common wisdom, the corrected series exhibit stable labor shares across all major economies, except the US, where the corrected labor share declines by 6 percentage points since 1980.

Keywords: Labor Share, Residential Real Estate, Self-Employment, National Accounts

JEL Classification: E22, E25, L85