New research reveals how labor share impacts productivity growth cycle.
The article explores how changes in the share of income going to workers affect the growth of labor productivity. By analyzing the behavior of companies seeking profits, the researchers found that the labor share influences how much firms invest in new technology to reduce labor costs. This relationship is crucial for understanding how the economy grows and how employment rates are affected by investment decisions. The study shows that under certain conditions, the economy can either follow a cyclical or a steady growth path in the long run.