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Marie Sklodowska Curie Action 

The Role of Global and Sectoral Factors in Labour Share Fluctuations

 Project ID: GaSLS 746100

 From 2017-07-03 to 2019-07-02, ongoing project

Funded by: HORIZON 2020

Proposal Acronym: GaSLS

Project ID: 746100

Topic: MSCA-IF-2016 - Individual Fellowships

Coordinator: Bank of Greece

Legal Representative (LEAR): Dimitris Malliaropulos, Director of Economic Analysis and Research

Type of action: Society and Enterprise Panel

Secondment: Organisation for Economic Co-operation and Development (OECD)

 

Individual Fellow: Dr Aikaterini (Katerina) Karadimitropoulou

Objective:

This project will investigate the distribution of national income between profits and wages as proxied by the labour share in national income. The focus will be to identify the empirical regularities of factor shares in developed and emerging countries and across industries.

In 1957, Kaldor established an influential stylised fact for macroeconomic modelling: the stability of the labour share. This finding, which has implications for macroeconomic dynamics, the shape of the production function and inequality, led social scientists to become 'silent' and to neglect research on labour share for many decades. Standard neoclassical growth and business cycle models, following Kaldor’s stylised fact, assume a one-to-one substitution between capital and labour. However, the recent observation of a declining labour share points to an incomplete understanding of macroeconomic dynamics and to potentially erroneous policy implications drawn from these models. This has renewed the interest of macroeconomists to unveil the sources driving this decline.

The proposed study on the fluctuations of the labour share from a solid empirical standpoint will provide the broad social science academic community and the policymakers with a better understanding of the behaviour of the labour share. In particular, this project aims at (i) reconciling the existing literature on the sources of labour share decline by examining a large set of driving forces and their relationship to key macroeconomic variables; (ii) providing a descriptive analysis of labour share from a multi-sector and multi-country perspective; as well as, a decomposition of labour share into national and external factors. This project will thus strictly link academic literature and policymakers’ interests with issues such as what should be the appropriate response of governments to the observed decline of the labour share and its implications for fiscal and monetary policy.

What is the Marie Sklodowska Curie Action?

The Marie Sklodowska Curie Action (MSCA) is a funded scheme under the European Commission’s Horizon 2020 funding. It is considered the most prestigious and competitive European funding scheme.

It provides grants to doctoral candidates or highly experienced researchers who create strategic partnerships with research-focused organizations (universities, research centres, and companies) which act as host institutions.
The MSCA aims to equip researchers with the necessary skills and international experience for a successful career, either in the public or the private sector. The programme responds to the challenges sometimes faced by researchers, offering them attractive working conditions and the opportunity to move between academic and other settings.

What is the Social Impact?

The study of the implications of the labour share from a solid empirical macroeconomic standpoint will provide the broad social science academics and the policymakers community with a better understanding of the behavior of the labour share and its effects on key aggregate macroeconomic variables and will help re-focus the interest of the discipline by emphasizing the important role of income shares that has been neglected so far in economics.

Therefore, there is no better way to tackle the questions that have arisen on the labour share distribution than to have both ends of the spectrum (I.e., researchers and policymakers) working together to provide empirical-based policy making. The Society and Enterprise and Marie Curie fellowship enable exactly that.


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