| New research from Michael Elsby, Bart Hobijn, and Aysegul Sahin on the role of trade in reducing the labor share of income is attracting a lot of attention, e.g., from Matt Yglesias: One thing that they find is that the headline decline in this indicator is actually a bit overstated due to technical issues with the treatment of self-employment income. About a third of the total decline, they think, can be attributed to miscalculation.
The blockbuster finding, however, is that the remainder is very heavily concentrated in industries that are newly composed to import competition. In other words, the labor share of national income has fallen because many more industries are exposed to foreign competition in a way that’s systematically advantaged the owners of capital.........................................Full Article: Source
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