The impact of ICT and intangible capital accumulation on employment growth and labour income shares

• Published in: Structural change and economic dynamics Vol. 70; pp. 211 - 220
• Main Author: Stehrer, Robert
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.09.2024
• Subjects: Capital accumulation; ICT capital; Income distribution; Intangibles; Labour demand; Income distribution; ICT capital; Intangibles; J31; Labour demand; J23; Capital accumulation; O52; O33
• ISSN: 0954-349X
• DOI: 10.1016/j.strueco.2024.02.003

This paper investigates the impact of the accumulation of tangible capital, ICT and intangible capital assets like software and databases or R&D on employment growth and the changes in labour income shares at the country-industry level. The econometric analysis is derived from a Cobb–Douglas production function taking into account the stylised fact that the capital–output ratios are rather constant or increasing over time with the latter being the case particularly for ICT and intangible assets. The accumulation of tangible assets like machinery and transport equipment then has a relatively strong positive relation to employment growth. Further in line with the theoretical outline, the accumulation of ICT assets or intangible assets are less strongly related to employment growth. Both these conjectures are confirmed econometrically. The impact on labour income shares is mixed, but generally small. •Capital–output ratios are increasing with capital accumulation of ICT and intangible asset types.•Accumulation of tangible capital is positively related to employment growth.•ICT and intangible capital accumulation is also positively but only weakly linked to employment growth.•Impact on labour income shares is mixed and small.