Research Desk investigates: How has the role of capital and labor in determining output changed?

...which is probably the main reason (rather than globalization or government policy) why lower and middle class wages are stagnant and income at the high end is skyrocketing. Those who control capital take the bulk of the productivity benefit from it.

This is a notion that really should be more widely discussed and understood, because then we'd realize that the best (only?) path to increasing income for people at the median and below is one that involves enhancing labor productivity (primary education, secondary education, job training, reduced labor market frictions, etc.)

I think you may have misunderstood the question. When I read it, I thought it was about who benefits from gains in productivity--the workers or the investors? If investors are capturing most of the gains, that would be reflected in rising inequality. But looking at the answer you gave, note that if a company raises more money to buy equipment to allow fewer workers to do the job, that would show as an increase in labor productivity. If it hires smarter, better educated workers who can produce more, that would show as an increase in capital productivity. So in a sense these terms mean the opposite of what they appear to.

I agree, sgrmfox, I think the original questioner was interested in who received what share of the gains (profits) from increased productivity over time. That would make more sense from the standpoint of inequality, anyway. (Although this info would also be useful in relation to that.) And if that's not what he was asking, I'd like to know that answer:).

Dylan,

Something for your next Research Desk:

Steve Benen posted this on worries about the national debt.

http://www.washingtonmonthly.com/archives/individual/2010_08/025324.php

Could you post a table where the $43,000 per person national debt is instead distributed across income deciles by share of national income? Something where the folk near the poverty line owe very little and the millionaires/billionaires owe a lot. The rich know they've received all of the gains of the last decade. I suspect rich are worried they'll have to pay their fair share.

I think the important question is how excess growth gets allocated between labor and capital.

Wages used to grow by inflation + a share of excess growth, through productivity gains (where that share was close to 50%). Today, we are lucky if wages increase by inflation.

Workers no longer have a pension (some do have a savings account, courtesy of their employer -- but that is no pension). They are getting killed by health costs. And, real wages haven't grown in 3 decades -- despite the folks at the top enjoying substantial growth (obviously, that implies give backs at teh bottom or middle -- right?)

It's all about leverage, and employers have used the legal and political systems to totally defang workers (trade, labor law, less progressive taxation, privatization...)

I keep waiting for people to get fed up and fight back. Still waiting.

These definitions are weird. If workers figure out a way to get more revenue out of existing equipment, then capital productivity goes up. (Sometimes in this scenario labor productivity will go up, sometimes not.)