Growth Regimes, Technology, Skill Level, and the Labour Share

This paper uses the concept of ‘growth regimes’ to revisit the study of the determinants of the declining labour share in advanced economies. We examine a panel of OECD countries with aggregate and industry level data and explore the effects of technological progress on the labour income share. Our findings suggest that growth regimes influence the relationship between labour share and technology. The fall in relative prices of investment goods shrinks the medium-skilled labour share of countries with high ICT and dynamic services such as the Nordics. In contrast, falling relative prices of investment goods decline the low-skilled labour share in countries with lower ICT service sectors, such as Austria, Germany, Belgium, Japan, France and Southern Europe. The fall in the industry-level relative prices of ICT investment to consumption goods leads to the decline in the labour share