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Title: Labor Intensity in an Interconnected Economy

Citation Type: Miscellaneous

Publication Year: 2014

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Abstract: How do supply chains affect the intensity with which an industry uses labor? I derive the network-adjusted labor intensity as the answer to this question. The network-adjusted labor intensity measures not just the direct labor intensity of a given industry, but also takes into account the labor intensity of all its inputs, its inputs inputs, and so on. I show that this measure is the relevant sufficient statistic determining labors share of income, the propagation of demand shocks, the relative rankings of government employment multipliers, and the composition of optimal fiscal policy. I use network-adjusted labor shares to decompose labors share of income into disaggregated industrial components. Using a sample of 34 countries from 1995 to 2009, I find that labors share of income has declined primarily due to a universal decrease in labor-use by all industries, rather than changes in households consumption demands or firms input demands. This is in contrast to the popular value-added decomposition, which gives a much larger role to industrial composition.

Url: http://scholar.harvard.edu/files/baqaee/files/jmp_draft1.pdf

User Submitted?: No

Authors: Baqaee, David R.

Publisher: Harvard University

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

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