One recent paper that's substantially influenced my thinking is German Gutierrez & @so_piton: "Revisiting the Global Decline of the (Non-Housing) Labor Share"

The headline: (non-housing) labor shares have *not declined* in any major advanced economies except the US and Canada

This is big -- it contradicts the emerging(emerged?) conventional wisdom that the decline of the labor share is a global phenomenon.

How do they get there? The big issue is measurement -- interesting in itself, and illustrates the importance of careful, deep, data work! 2/

As all labor share researchers are aware, there are 2 big measurement issues when thinking about labor share: (1) housing (important, but doesn't tell us how *business* incomes are distributed) and (2) the self-employed (how to impute their income between labor and capital?) 3/

To solve these problems, researchers often focus on the *corporate* labor share. But Gutierrez and Piton show that in most countries, this still includes a lot of housing and also often includes self-employed workers. So we still have a challenge! 4/

Gutierrez & Piton develop methods to adjust for housing and self-employment in the corporate sector in a consistent fashion across countries. These adjustments matter A LOT for headline findings on the labor share. The decline now looks like a North American phenomenon. 5/

(Note: for those - including myself - who prefer net labor shares adjusted for depreciation, rather than gross labor shares, the broad picture still holds - see Figure D2 below from their Appendix)

(Note 2: The labor share of income incl housing still matters for income distribution - this doesn't mean we shouldn't care about it. But, understanding what's happened to the labor share of *business* income excl housing matters for diagnosing causes and for possible remedies)

Another interesting finding is that the manufacturing labor share fell off steeply in the US, but did not exhibit the same trend in Europe. In the US, manufacturing was one of the biggest contributors to the aggregate labor share decline. 6/

G&P argue that the fact that labor shares did NOT decline consistently across country suggests country-specific explanations may be at play...

(& this argument was important in informing my paper with @LHSummers on the role of declining worker power) 7/ https://twitter.com/annastansbury/status/1265411852923789315

That's all - here's the paper if you're interested in reading more!!

AERI link: https://www.aeaweb.org/articles?id=10.1257/aeri.20190285

Ungated: http://germangutierrezg.com/research.html 

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