Does housing explain the rise in the net capital share?
Core argument: The net capital share in large developed economies has traced a U-shape since World War II, declining until the mid-1970s and rising moderately since, with the housing sector the main driver.
The net capital share in large developed economies has followed a U-shaped trajectory postwar, driven mainly by the housing sector, where ownership is less concentrated, potentially mitigating inequality impacts. Initially declining until the mid-1970s, the net capital share has since moderately increased, contrasting with gross capital shares that reflect production structure. Disaggregating net capital income reveals that the residual share of pure profits, influenced by cyclical markups and market power shifts, plays a central role. This underscores the importance of net measures in inequality debates, as they reflect ultimate resource command between labor and capital. The rise in gross capital share in industries like software highlights capital's production role but may not translate to increased returns for capitalists due to rapid obsolescence. Understanding these dynamics is crucial for policymakers and economists analyzing income distribution and market power changes.

