A growing body of evidence points to a decline in the labor share of income. A sizable empirical literature delves into the relationship between technological progress, globalization, and market concentration and labor's declining income share, which can exacerbate income inequality. Population aging has often been put forth as a factor that worsens income inequality. However, few studies have empirically examined the nexus between aging and the labor share, a potentially significant driver of inequality. In this study, we use industry-level data to investigate the nexus in Korea, a rapidly aging country where inequality has emerged as a big social and economic issue. We find a positive and significant association between aging and labor share. Hence, at least in Korea, we do not find that aging exacerbates income inequality by reducing labor's income share. In addition, our evidence suggests that labor share has a negative link with both information and communication technology capital and robots.
Bibliographical noteFunding Information:
Asian Development Bank; National Research Foundation of Korea, Grant/Award Number: NRF‐2021S1A5A2A01061871 Funding information
We would like to thank Hyunjung Kim and Jongwon Kim for excellent research assistance and ADB for financial support. Kwanho Shin acknowledges support from the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF‐2021S1A5A2A01061871).
© 2022 East Asian Economic Association and John Wiley & Sons Australia, Ltd.
- information communication technologies
- labor share
ASJC Scopus subject areas
- Geography, Planning and Development