Intangible capital, the labour share and national ‘growth regimes’
Journal of Comparative Economics, 2023
This paper examines how far an increase in the intangible capital-to-output ratio contributes to ... more This paper examines how far an increase in the intangible capital-to-output ratio contributes to changes in the labour share. We focus on a selection of OECD countries using industry-level data from 1995 to 2017. We show that the relationship between intangible capital and the labour share is heterogeneous, and whether it is positive or negative depends on the types of intangibles and the growth regime of the national economy. In the Nordic countries, whose growth regimes balance domestic demand and exports of high-value services, the net effect of intangible capital on the labour share is tiny but positive. In contrast, it is negative for countries with high-quality manufacturing exporting sectors, such as Germany, Belgium and Austria. The evidence suggests that there are counteracting impacts in the USA and the UK, although the net effect is positive. We examine the bidirectional causality between the labour share and intangibles, showing that those behave as gross complements in the Nordic countries and as gross substitutes in the high-quality manufacturing export-led regimes; in the rest of the regimes, it depends on the asset.
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Papers by Nick Pearce
In this report, we focus on the role of technological change as a central driver of the decline in the labour share and explore its contingency: both across contexts and across definitions/operationalisations of technology.
With respect to the latter, we distinguish between perspectives that place physical capital and investment in automation and ICT at the centre of technological change on the one hand, and the growth of the knowledge economy and intangible capital on the other. Meanwhile, following
work by Baccaro and Pontusson (2016), and more recently Hassel and Palier (2021), we utilise the concept of ‘growth regimes’ to analyse how the effects of technology are mediated and moderated by national political-economic institutions. This approach allows us to test
more nuanced arguments about the role of technological change in the decline in the labour share and to discuss the likely effects, and political feasibility, of policy solutions such as universal basic income (UBI) that are often advanced as an answer to increased automation and lower returns to labour.
policymakers about gaps in knowledge and to make suggestions for future experimental design. We found 38 experiments across Europe, North America and Asia that met inclusion criteria. Most experiments involve cash benefits targeted at a relatively small number of low-income
households for a period of roughly two years dispersed across a relatively large area. We consider that this makes a sound case for the development of more heterogenous target groups, a longer time period and a greater examination of community effects. We also provide some suggestions for more policy and political-oriented goals, which we argue are an oft-ignored elements of these experiments in policymaking and research.
In this report, we focus on the role of technological change as a central driver of the decline in the labour share and explore its contingency: both across contexts and across definitions/operationalisations of technology.
With respect to the latter, we distinguish between perspectives that place physical capital and investment in automation and ICT at the centre of technological change on the one hand, and the growth of the knowledge economy and intangible capital on the other. Meanwhile, following
work by Baccaro and Pontusson (2016), and more recently Hassel and Palier (2021), we utilise the concept of ‘growth regimes’ to analyse how the effects of technology are mediated and moderated by national political-economic institutions. This approach allows us to test
more nuanced arguments about the role of technological change in the decline in the labour share and to discuss the likely effects, and political feasibility, of policy solutions such as universal basic income (UBI) that are often advanced as an answer to increased automation and lower returns to labour.
policymakers about gaps in knowledge and to make suggestions for future experimental design. We found 38 experiments across Europe, North America and Asia that met inclusion criteria. Most experiments involve cash benefits targeted at a relatively small number of low-income
households for a period of roughly two years dispersed across a relatively large area. We consider that this makes a sound case for the development of more heterogenous target groups, a longer time period and a greater examination of community effects. We also provide some suggestions for more policy and political-oriented goals, which we argue are an oft-ignored elements of these experiments in policymaking and research.