Longer-run distributive cycles: wavelet decompositions for the US, 1948–2011

A non-linear Keynesian Goodwin-type endogenous model of the cycle: Bayesian evidence for the USA

“…Of course, the wage-led regime that the US economy followed during the period 1974-1978 is characterized by a rise in the wage share, which stimulated economic activity due to the strong response of consumption, compared to the weaker negative response of investment demand to lower profitability. In a broader context, our main findings for the US economy as a whole coincide with the relevant literature, according to which the US economy consistently displays 'counter-clockwise' cycles between employment rate and labour share of income, utilization rate and labour share of income as well as utilization rate and employment rate (see Barrales and von Arnim (2017)).…”

Wage-led versus profit-led demand regimes: the long and the short of it

“…Historically, it was a stylized fact of capitalism that relative shares of wages and profits in national income varied only cyclically and had no long-run trends. Yet, the data shown in Figures 1 and 2 in this paper and several of the most recent empirical studies (for example, Kiefer and Rada 2015;Stockhammer and Wildauer 2015;Barrales and von Arnim 2017) verify that, since roughly the late 1990s, we have witnessed an unprecedented secular decline in the wage share in the US and various other countries coupled with weaker performance in terms of any measure of utilization or growth -a combination often referred to as 'secular stagnation' (Blecker 2016;Hein 2016). Thus, it may well be that the potentially wage-led nature of demand in the long run (at least for some causes of distributional shifts) will only become observable after we are able to obtain some historical hindsight on the present era, in which wage shares have sunk to unusually low levels on a sustained basis.…”

“…He found that changes in the profit share were largely explained by a variable reflecting international competitiveness (relative unit labor costs). Barrales and von Arnim (2017) find bidirectional causality between each of their three alternative measures of demand (discussed earlier) and the wage share, suggesting that any estimates that treat the wage (or profit) share as exogenous are subject to simultaneity bias. 11.…”

“…2 Barrales and von Arnim (2017) perform a 'wavelet' analysis that detects cyclical patterns in the data at different frequencies. Using US data with three alternative measures of demand (the income-capital ratio, output gap, and employment rate), these authors find evidence of Goodwin-type cycles reflecting profit-led demand and a 'profit squeeze' (that is, rising demand pressure increases the wage share) at all short-run and medium-run frequencies.…”

The Decline of the U.S. Labor Share Across Sectors

“…The annual compound growth rate of total payrolls in GDI from 1948-1970 (which represents the series' peak) is as well close to one half percentage point. Again, one might compare this to the labor share inBarrales and von Arnim (2017, Figure 2).…”