What Drives the Labor Share of Income?

The share of national income going to workers has been trending downwards over time in many advanced economies, including in Europe. We discuss to what extent this development is really there in European data and what economic mechanism can account for it. We draw on insights provided by the following articles: Gutierrez & Piton, "Revisiting the Global Decline in the (Non-Housing) Share of Income", AER Insights, 2021, https://www.aeaweb.org/articles?id=10.1257/aeri.20190285 Kehrig & Vincent, "The Micro-Level Anatomy of the Labor Share Decline", Quarterly Journal of Economics, 2021, https://doi.org/10.1093/qje/qjab002 DeLocker and Eeckhout, "Global Market Power", working paper, 2020, https://crei.cat/wp-content/uploads/2020/10/GLOBAL.pdf