Peter Orszag has a column about the diminishing share of labor in national income, relative to capital. Mike Konczal provides some useful additional discussion. Both of them frame the issue as a new empirical mystery, because it contradicts a “stylized fact” that economists have long assumed about capitalist economies: that the relative share of labor and capital in national income remains constant over time.

I try to avoid the characteristic sociologist’s vice of economics-bashing, but this does rather strike me as a case where economists are betraying their insularity by purporting to discover something that other social scientists are already talking about. Mike quotes (the generally excellent) Arjun Jayadev musing that “A more comprehensive account should really take a look at the politics of this shift and there is some evidence for the contention that an eroded bargaining power of labor is an important factor.” As it turns out, someone has looked at “the politics,” although they’re not an economist. Last year, the American Sociological Review published a paper called “Good Times, Bad Times: Postwar Labor’s Share of National Income in Capitalist Democracies” by Tali Kristal of the University of Haifa, which bears directly on this issue. (An un-gated version is here.)

One of the tricky things about explaining long-term economic trends is that we don’t have access to the counterfactual: what would the US economy look like if, say, we still had 1950s levels of unionization? As a next-best solution, though, we can contextualize the United States by comparing it to other rich countries. The global economy is characterized, as Trotsky put it, by “combined and uneven development”: while the declining share of labor income is a cross-national phenomenon, it has not been experienced or responded to in exactly the same way everywhere. Kristal’s paper compares the US to fifteen other countries in the period since 1960, in an attempt to identify some of the factors behind labor’s declining income share.