Edward Conard

Top Ten New York Times Bestselling Author

  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Upside of Inequality Oxford Unintended Consequences

AI Summary. The share of US income going to labor reached its lowest level since the Great Depression, falling roughly 5 percentage points between 1929 and 2022 across most industries, alongside a worldwide decline of about 6 percentage points since 1980. The author argues the most plausible causes are technological, including capital-augmenting technology.

Loukas Karabarbounis Journal of Economic Perspectives
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Labor’s share of US GDP fell from 64% in 1950 to 59% in 2022, consistent with declines in other countries since 1980. Increasing deployment of capital-augmenting technology appears central to this trend.

Is technology driving the worldwide decline in labor's income share?

Core argument: The U.S. labor share fell roughly 5 percentage points between 1929 and 2022, reaching its lowest level since the Great Depression, with declines across the great majority of U.S. industries.

In 2022 the labor share in the United States was at its lowest level since the Great Depression. The headline estimate for the United States is a roughly 5 percentage points decline of the labor share between 1929 and 2022, [across] the great majority of US industries. We observe [more recent] labor share declines in Europe, Asia, and emerging markets - a worldwide decline of roughly 6 percentage points in the labor share since 1980. My view is that the most plausible causes have technological origin. Perhaps the most intuitive explanation for the decline of the labor share is that capital-augmenting technology has increased over time. When factors are substitutes following an increase in capital-augmenting technology, production requires more capital relative to labor to accomplish the same level of output. In this case, the labor share decreases.

Takeaways by Macro Roundup® AI

  1. The U.S. labor share fell roughly 5 percentage points between 1929 and 2022, reaching its lowest level since the Great Depression, with declines across the great majority of U.S. industries.
  2. Labor share declines also appear in Europe, Asia, and emerging markets, amounting to a worldwide drop of roughly 6 percentage points since 1980.
  3. The author argues the most plausible causes of the labor share decline are technological, since rising capital-augmenting technology requires more capital relative to labor for the same output when factors are substitutes.

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  • Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends — Using administrative tax data with the Survey of Consumer Finances, the authors estimate the top 1% pre-tax income share fell from 11.1% in 1962 to 9.4% in 1979, then rose to 13.8% by 2019, a 3 percentage point rise over the full period. Their after-tax measure shows increases of only 1.4 points since 1979 and 0.2 points since 1962.
  • Perspectives on the Labor Share — The share of US income going to labor fell roughly 5 percentage points between 1929 and 2022, with declines across most US industries and in most countries of Europe, Asia, and emerging markets. The author argues the most plausible causes are technological, including the information age and automation.
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