What question did this study set out to answer?

The aim is to explore why the labor share is declining in aggregate terms while increasing at the firm level, particularly in manufacturing.

Not a Typical Firm: Capital–Labor Substitution and Firms' Labor Shares

View Full Paper

Ask AI

Bookmark

Authors

Model shows declines in labor share amidst automation trends in the manufacturing sector, suggesting varied firm strategies.

The aim is to explore why the labor share is declining in aggregate terms while increasing at the firm level, particularly in manufacturing.
Developed a model incorporating fixed costs of automation.
Analyzed the impact of decreased prices of capital goods on labor shares.
Calibrated automation costs to reflect observed differences in firm behaviors.
Larger firms automate more, leading to a decreased overall labor share.
The typical firm maintains labor-intensive practices, increasing its labor share.
The model accurately replicates observed trends in response to lower capital prices.

Hubmer et al. (2026) studied this question.

View Full Paper

Ask AI

Bookmark