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

• 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.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Ekonomisk historia (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economic History (hsv//eng)

Keyword

ineqality

factor shares

event study

economic history

institutions

Publication and Content Type

ovr (subject category)

vet (subject category)