Saturday, November 02, 2013

Inequality: Labour's share lost | The Economist

Inequality: Labour's share lost | The Economist:  What is behind the fall in labour share of income?
"Part of the decline, especially in Europe in the 1980s and 1990s, is attributable to labour-market liberalisation. Some of the decline, especially in America in the 2000s, can instead be attributed to exposure to imports from big emerging markets. But across the whole of the period and all countries (including emerging markets like China) technology seems to be the most important factor. Technology has gotten better and much cheaper over the past generation, and that has allowed firms to substitute capital for labour across a broad range of occupational categories. In the 1980s and 1990s technology had its greatest effect in production activities, in automation of routine physical tasks. From the 1990s on the impact of technology became more apparent in information-processing roles. Highly skilled workers mostly benefited from these technological shifts, as new technologies (especially in information and communication technology) have been complementary to their abilities. Owners of capital have also prospered. But middle-skill workers have done poorly, as have low-skill workers, thanks to increased competition from those displaced from middle-skill work"

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