The Medium Run Revisited: An Alternative Perspective on Labour Share Developments in European and Anglo-Saxon Countries

Abstract: This thesis revisits one of the most prominent contributions to the literature on labour income shares by \citet{blanchard1997} and offers an alternative perspective on the developments in European and Anglo-Saxon countries between 1970 and 2019. Labour shares in both groups of countries declined resulting from changes in relative factor prices and quantities. I find that changes in relative factor prices were mainly driven by profit rate dynamics in both groups of countries. My empirical analysis identifies technical change and bargaining power of workers as determinants. Based on the contrasting developments of these determinants in European and Anglo-Saxon countries, I develop my own assessment of relative factor price and labour share developments in both groups of countries.