What question did this study set out to answer?

To survey empirical evidence on the evolution of the capital share and analyze its role as a key driver of asset prices and equity values.

August 19, 2026Annual Review of Financial Economics

Capital Share Risk

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Authors

DGDaniel GreenwaldNew York University SLSydney C. LudvigsonNew York University

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Implication

Macroeconomic analysis reveals rising capital share drives equity values in the US corporate sector, highlighting the divergence between stock prices and economic growth.

Key Points

To survey empirical evidence on the evolution of the capital share and analyze its role as a key driver of asset prices and equity values.
Analyzed aggregate macroeconomic and financial time-series data from the US corporate sector spanning from the late 1980s onward.
Reviewed existing empirical literature on capital share measurement and evaluated structural connections between labor share reductions, corporate payouts, and stock valuations.
The capital share of aggregate output has more than doubled since the late 1980s, primarily driven by a declining labor share.
Increases in the capital share translated almost one-for-one into higher corporate payouts to firm owners.
Shifts in capital share account for the long-run divergence between stock market valuation growth and real economic activity.

Cite This Study

Greenwald et al. (2026) studied this question.

synapsesocial.com/papers/6a8563fe03308d306e2d789d https://doi.org/10.1146/annurev-financial-111524-013823

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Implication

Macroeconomic analysis reveals rising capital share drives equity values in the US corporate sector, highlighting the divergence between stock prices and economic growth.

Capital Share Risk

Discussion

Member takes

Implication

Key Points

Cite This Study

Capital Share Risk

Discussion

Member takes

Implication

Key Points

Cite This Study

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