Credit and the labour share: Evidence from US states
By: Leblebicioglu, Asli and Weinberger, Ariel
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Material type: 
BookPublisher: The Economic Journal Description: 130(630), Aug, 2020: p.1782-1816.Subject(s): banking deregulation
In:
The Economic JournalSummary: We investigate the role of credit markets as a cause for changes in the US labour share. Causal evidence is provided that the labour share declined between 0.8 and 1.2 percentage points following the interstate banking deregulation, explaining more than half of the overall reduction during that period. The lower costs of credit and greater bank competition in each state are mechanisms that led to the decline. To quantify the relationship between credit and factor payments, we calibrate a model with financial frictions and highlight financial development as a potential channel for the reduction in labour share observed globally. – Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 130(630), Aug, 2020: p.1782-1816 | Available | AR123877 |
We investigate the role of credit markets as a cause for changes in the US labour share. Causal evidence is provided that the labour share declined between 0.8 and 1.2 percentage points following the interstate banking deregulation, explaining more than half of the overall reduction during that period. The lower costs of credit and greater bank competition in each state are mechanisms that led to the decline. To quantify the relationship between credit and factor payments, we calibrate a model with financial frictions and highlight financial development as a potential channel for the reduction in labour share observed globally. – Reproduced
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