Benjamin R. Bridgman

We provide evidence on household and market production in 36 countries since 1960. On average the household sector accounts for almost half of total hours worked. As GDP per capita increases, the employment share of household production in total hours worked initially declines and then hardly changes while the employment shares of market goods and services decrease and increase. Estimating the value added of household production yields similar patterns. Labor productivity of household production is lower than and positively correlated with that in the market. These findings can be used as an input into quantitative work involving household production.

Labor share has been falling since the 1970s. I show that U.S. labor share has not fallen as much once items that do not add to capital, depreciation and production taxes, are netted out. Recent net labor share is within its historical range whereas gross share is at its lowest level. This effect holds for other large economies, even undoing the fall in labor share in some cases. The overall picture is no longer one of unprecedented, globally declining labor share.

Published in Macroeconomic Dynamics, December 2018 "Is Labor's Loss Capital's Gain? Gross versus Net Labor Shares"