Capital heterogeneity and the decline of the labour share

We investigate the decline of the labour share in a world characterized by increasing heterogeneity of capital assets. Our results show that, over the 1970-2007 period, the decline of the labour share has been mainly driven by Information and Communication Technology (ICT) assets and is mitigated by increasing investments in R&Dbased knowledge assets. Extending to other forms of intangible capital from 1995 onwards, we find that intangible investments related to innovation increase the labour share while those related to the organisation of firms contribute to its decline, particularly for the low and intermediate skilled workers. Our results are robust to an array of econometric issues, namely heterogeneity, cross-sectional dependence, and endogeneit