Comparing profit shares in value-added in four OECD countries

Abstract

This working paper has been prepared by By Pierre-Alain PIONNIER and Emmanuelle GUIDETTI (OECD).

Has the Labour Share Declined?

“…Some authors, for instance Karabarbounis and Neiman (2014) and Rognlie (2015) have restricted labour share measurement to the corporate sector, thereby aiming to avoid splitting mixed income altogether as, in principle, corporations do not produce mixed income. However, Pionnier and Guidetti (2015) find that the practice of allocation of units to the corporate and to the household sector varies significantly between countries. For instance in Germany and Italy, a large part of self-employed workers, and consequently the mixed income that they receive, are allocated to the corporate sector 9 .…”

“…Should all resident producers and all domestic income be considered or should certain economic activities or sectors be excluded? One activity that is regularly considered for exclusion is income from owner-occupied housing (see, for instance OECD, 2012; Pionnier and Guidetti, 2015). This income is an imputed item that corresponds to the value of housing services for persons living in their own house.…”

“…The consequence is a systematic downward bias in the remuneration of government-owned capital 8 . Pionnier and Guidetti (2015) therefore also recommend exclusion of the public sector (or of industries that are dominated by non-market producers). We agree in principle with this reasoning for purposes of production analysis but encounter the practical difficulty that in general industry data with the appropriate break-down of value-added components and matching employment series is less timely and patchier than aggregate data which would limit the scope of cross country comparisons.…”

“…Various authors (Johnson, 1954;Jorgenson, 1991;Young, 1995;Gollin, 1998Gollin, , 2002Krueger, 1999;Bernanke and Gurkaynak, 2001;Freeman, 2011;Guerriero, 2012;Cho, Kim and Schreyer, 2014;Pionnier and Guidetti, 2015) have employed different approaches towards splitting mixed income. The theoretically most compelling approach is a procedure based on matching micro-data records at national level.…”

Returns to intangible capital in global value chains

“…At the same time, a reduction in the labour income share in advanced economies has been highlighted (Autor et al, 2017 [51]). The prevalence and causes of these trends remain contested and the literature investigating these patterns is still at a nascent stage (Cette, Koehl and Philippon, 2019 [52]; Cho, Hwang and Schreyer, 2017 [53]; Gutiérrez and Piton, 2019 [54]; Pike, 2018 [55]).…”