Impact of ICT Capital on Labor Share: Evidence from Japan

This chapter examines the determinants of the labor shareLabor share of income in Japan. The novelty of my empirical analysis is that it estimates the impacts of ICT and non-ICT capital intensities separately. This approach is motivated by the fact that, since the 1990s, the growth rate of ICT capitalInformation and communication (ICT) capital stock has been considerably higher than the growth rate of non-ICT capital stock (or traditional capitalTraditional capital stock). Using a panel of 97 sectors in Japan for the period 1994–2015, I show that the deepening of ICT capitalInformation and communication (ICT) capital has a negative impact on the labor share. Furthermore, this negative impact is amplified after the 2000s, suggesting that the recent technological development significantly contributes to the reduction of the labor share in Japan.