Declining Labor and Capital Shares

59 Pages Posted: 5 Dec 2019

Date Written: November 19, 2019


This paper presents direct measures of capital costs, equal to the product of the required rate of return on capital and the value of the capital stock. The capital share, equal to the ratio of capital costs and gross value added, does not offset the decline in the labor share. Instead, a large increase in the share of pure profits offsets declines in the shares of both labor and capital. Industry data show that increases in concentration are associated with declines in the labor share.

Suggested Citation

Barkai, Simcha, Declining Labor and Capital Shares (November 19, 2019). Journal of Finance, Forthcoming, Available at SSRN: or

Simcha Barkai (Contact Author)

Boston College

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States


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