蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Not a Typical Firm: Capital鈥揕abor Substitution and Firms' Labor Shares
蝌蚪网 Journal: Macroeconomics
(pp. 34–71)
Abstract
The US labor share has declined, especially in manufacturing and retail. Yet the labor share of a typical firm in these sectors has risen. We introduce a model where firms incur fixed costs to automate tasks. A decline in the price of capital goods used for automation reproduces the observed patterns: large firms automate tasks, reducing the aggregate labor share, while the median firm continues to operate a labor-intensive technology. When calibrating the automation fixed costs to match the observed adoption heterogeneity, the model generates the aggregate and firm-level facts quantitatively in response to lower capital prices, especially in manufacturing.Citation
Hubmer, Joachim, and Pascual Restrepo. 2026. "Not a Typical Firm: Capital鈥揕abor Substitution and Firms' Labor Shares." 蝌蚪网 Journal: Macroeconomics 18 (2): 34–71. DOI: 10.1257/mac.20230325Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D33 Factor Income Distribution
- E25 Aggregate Factor Income Distribution
- L60 Industry Studies: Manufacturing: General
- O32 Management of Technological Innovation and R&D