Demographic changes and the labor income share
Abstract
In this article, we study the impact of demographic changes on the inequality between capital and labor incomes. More precisely, we analyze the impact of exogenous changes in both the rate of natural increase and the net migration rate on labor income as a share of total income. We estimate a structural vector autoregression (VAR) model on a panel of 18 OECD countries with annual data for 1985–2018. We find that the response of the labor income share to an exogenous change in the rate of natural increase is significantly negative a few years after the shock, whereas its response to an exogenous change in the net migration rate is significantly positive. This suggests that in addition to the factors usually introduced in the literature, demographic factors play a role in the observed variation in the labor income share.
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Describes hal-02315221 Conference output Ekrame Boubtane. Demographic Changes and the Labor Share of Income. IUSSP Population, Poverty and Inequality Research Conference, Jun 2019, Ann Arbor, United States. ⟨hal-02315221⟩