New model shows how capital accumulation boosts labor income share!
The study looked at how the share of income going to workers changes as companies use more capital. Previous models suggested that this share should go up, but the researchers found that it can also go down if capital and labor can be easily swapped. They created a new model that shows the share of income going to workers can change based on how easily capital and labor can be substituted. The results of the new model support the idea that as companies accumulate more capital, workers' share of income can still increase, even if capital and labor can be swapped easily.