Economists: falling labor share and rising real wages aren't in tension in the AI era
soumitrashukla9 · x · 2026-09-22
- The quoted post makes a point many economists miss: a falling labor share and rising wages are not in tension — it's what you'd expect when capital's share rises and capital accumulates freely. Long-run capital supply is perfectly elastic at a return set by depreciation and discount rates, while labor supply is far more inelastic, so gains from capital-augmenting tech shifts accrue to the inelastic factor.
- Reposter alexolegimas notes he discussed this yesterday with economists Ben Moll and Azeem, and that there is now some evidence real wages and labor share are moving in opposite directions this time.
- The exchange bears on how AI's gains split between capital and labor.
Related event: Economists Debate Whether AI-Hit Labor Share Still Benefits Workers(4 posts)→
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