Labor Share, Markups, and Input-Output Linkages – Evidence from the U.S. National Accounts

Thu, 01 Jan 2026 00:00:00 +0000

The paper asks why the U.S. labor share has declined over the postwar period, and whether rising markups or capital deepening (automation, falling capital prices) is the primary driver. The authors argue that the existing literature lacks consensus partly because micro-level studies weight producers by sales shares rather than Domar weights, which are gross-output-to-GDP ratios that correctly capture how sectoral changes propagate through the input-output structure. When intermediate inputs are themselves marked up by their producers and then re-marked-up by downstream firms (“double marginalization”), a modest sectoral markup increase is amplified into a substantially larger aggregate effect.

Benjamin Bridgman | Macro Paper Warehouse

Labor Share, Markups, and Input-Output Linkages – Evidence from the U.S. National Accounts