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What Determines the Capital Share over the Long Run of History?

Bengtsson, Erik LU ; Rubolino, Enrico and Waldenström, Daniel (2020) In WID.world Working Papers
Abstract
This paper analyzes the determinants of the labor-capital split in national incomefor 20 countries since the late 1800s. Our main identification strategy focuseson unique historical quasi-experimental events: i) the introduction of universalsuffrage, ii) close election wins of left-wing governments, iii) decolonization, iv)unionization shocks, and v) wars. We also run instrumented panel regressions.Our findings show that the capital share decreased in response to radical institu-tional and political shifts, such as the introduction of universal suffrage in the early1900s, the undoing of colonialism and the implementation of redistributive policiesduring the post-war period. By contrast, the capital share increased... (More)
This paper analyzes the determinants of the labor-capital split in national incomefor 20 countries since the late 1800s. Our main identification strategy focuseson unique historical quasi-experimental events: i) the introduction of universalsuffrage, ii) close election wins of left-wing governments, iii) decolonization, iv)unionization shocks, and v) wars. We also run instrumented panel regressions.Our findings show that the capital share decreased in response to radical institu-tional and political shifts, such as the introduction of universal suffrage in the early1900s, the undoing of colonialism and the implementation of redistributive policiesduring the post-war period. By contrast, the capital share increased following theerosion of trade unionism since the 1980s. Wars, despite destroying the capitalstock, generated windfall profits that increased the capital share. (Less)
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author
; and
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
ineqality, factor shares, event study, economic history, institutions
in
WID.world Working Papers
issue
2020/08
pages
43 pages
language
Swedish
LU publication?
yes
id
eecfb2ae-016b-417b-90a4-c7ab1e1617ae
date added to LUP
2020-06-05 11:59:23
date last changed
2021-03-23 23:01:57
@misc{eecfb2ae-016b-417b-90a4-c7ab1e1617ae,
  abstract     = {{This paper analyzes the determinants of the labor-capital split in national incomefor  20  countries  since  the  late  1800s.   Our  main  identification  strategy  focuseson  unique  historical  quasi-experimental  events:  i)  the  introduction  of  universalsuffrage, ii) close election wins of left-wing governments, iii) decolonization, iv)unionization shocks,  and v) wars.   We also run instrumented panel regressions.Our findings show that the capital share decreased in response to radical institu-tional and political shifts, such as the introduction of universal suffrage in the early1900s, the undoing of colonialism and the implementation of redistributive policiesduring the post-war period.  By contrast, the capital share increased following theerosion  of  trade  unionism  since  the  1980s.   Wars,  despite  destroying  the  capitalstock, generated windfall profits that increased the capital share.}},
  author       = {{Bengtsson, Erik and Rubolino, Enrico and Waldenström, Daniel}},
  keywords     = {{ineqality; factor shares; event study; economic history; institutions}},
  language     = {{swe}},
  note         = {{Working Paper}},
  number       = {{2020/08}},
  series       = {{WID.world Working Papers}},
  title        = {{What Determines the Capital Share over the Long Run of History?}},
  url          = {{https://lup.lub.lu.se/search/files/80300736/brw_capital.pdf}},
  year         = {{2020}},
}