Date of Thesis

Spring 2023

Description

During the Neoliberal period, which roughly began in the early 1980s in the U.S., there was a substantial slowdown in the growth rate of real hourly compensation, while productivity had continued to grow. The last two decades of the Neoliberal period (2000 – 2020) also experienced somewhat of a substantial decline in the labor share. In recent decades, there has been a growing amount of literature attempting to explain the major factors that have contributed to these recent labor market developments. This study provides a means of investigating the changes in the labor share and its components (i.e., real hourly compensation, productivity and price ratio). In particular, this study looks at the decomposition of the labor share in the nonfinancial corporate sector during three periods, namely the Golden Age (1947-1970), the Transition period (1970- 1980), and the Neoliberal period (1980-2021). The results of the study are as follows: First, during the Golden age, the growth in the real hourly wage and productivity rose in tandem in the nonfinancial corporate sector. Second, the growth rate of real hourly compensation slowed down much more dramatically than the productivity growth during the Transition period. The unfavorable shift in the price ratio became the main contributing factor to the growth rate of labor share. Third, this trend continued in the Neoliberal period. The largest decline in the labor share has occurred within the last 20 years of Neoliberal period from 2000-2021. The paper then discusses competing theories on the slowdown in the real hourly compensation and the recent decline in the labor share.

Keywords

labor share, neoliberal, antitrust, price ratio, workers power, unionization

Access Type

Honors Thesis

Degree Type

Bachelor of Arts

Major

Economics

Second Major

Political Science

Minor, Emphasis, or Concentration

Legal Studies

First Advisor

Erdogan Bakir

Second Advisor

Geoffrey Schneider

Third Advisor

Vivien Leung

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