Modeling IPP capital and its effect on the labor share

Andonie, Alfredo; Degler, Moritz; Greppi, Andrea; Pisati, Lorenzo; Yagman, Ece

Modeling IPP capital and its effect on the labor share

License

Citation

Andonie, A, Degler, M, Greppi, A, Pisati, L, Yagman, E. Modeling IPP capital and its effect on the labor share. 2017. handle: http://hdl.handle.net/10230/33541

This citation was generated automatically.

Abstract

We investigate the effects of intellectual property products capital in the evolution of the labor share for five European countries. Using post-revision national accounts data, we construct a benchmark labor share with the contribution of both traditional and IPP capital, against which we measure a counterfactual LS which isolates the effects of IPP. We report that the labor share in Austria, France, Germany, and Spain has been consistently declining, with high variation across countries. Our results show that part of this decline is explained by the inclusion and growing importance of IPP capital in the economy. A closer look at France reveals that the main channels through which IPP has an impact on the labor share are a higher depreciation rate and investment flow relative to traditional capital.