Bargaining power, structural change, and the falling U.S. labor share

• We present empirical measures of bargaining power (the cost job loss) and structural change (two multivariate weighted indices) For the U.S. economy, we find that there is a significant robust negative relationship between labor share has declined due to direct indirect effects slower GDP growth Our results suggest changes have negatively affected through channel Most explanations for declining focus on such as deindustrialization, globalization, financialization, market concentration, technological change. argue these forces operate reduction in been driven by lower workers. first estimate labors income using bounds-testing approach relationship. then create novel indices regressions loss, generally finding increases both increased loss amplified its volatility over business cycle. analysis therefore supports hypothesis decline decreased suggests economic weak performance inequality.