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This paper examines how far an increase in the intangible capital-to-output ratio contributes to changes in labour share. We focus on a selection of OECD countries using industry-level data from 1995 to 2017. We show that the relationship between intangible capital and labour share is heterogeneous, and whether it is positive or negative depends on the types of intangibles and the growth regime of the national economy. In the Nordic countries, whose growth regimes balance domestic demand and exports of high-value services, the net effect of intangible capital on the labour share is tiny but positive. In contrast, it is negative for countries with high-quality manufacturing exporting sectors, such as Germany, Belgium and Austria. The evidence suggests that there are counteracting impacts in the USA and the UK, although the net effect is positive. We examine the bidirectional causality between the labour share and intangibles, showing that those behave as gross complements in the Nordic countries and as gross substitutes in the high-quality manufacturing export-led regimes; in the rest of the regimes, it depends on the asset.
|Journal||Journal of Comparative Economics|
|Early online date||7 Feb 2023|
|Publication status||E-pub ahead of print - 7 Feb 2023|
- Labour share
- intangible capital
- growth regimes
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
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Made Smarter Innovation - People-Led Digitalisation
Newnes, L., Barzotto, M., Battarra, M., Brace, C., Branicki, L., Burke, R., Davidson, M., Dhokia, V., Edwards, B., Fai, F., Flynn, J., Giannikas, V., Hintermair, U., Kyprianou, A., Larkin, C., Loukaides, E., McManus, M., Pearce, N., Shepherd, P., Shokrani Chaharsooghi, A., Tomlinson, P., Zhang, N., Carey, E., Ehrhardt, B., Garcia Lazaro, A. & Lattanzio, S.
Engineering and Physical Sciences Research Council
1/09/21 → 28/02/25
Project: Research council