The objective of this research proposal is to implement an empirical analysis of the labor share's causes of decline, regarding in particular a suitable model which permits to discriminate whether the happening of a shock will affect the stochastic or the systematic components of the series and whether that non-linearity exists or not. Regarding this aspect, introducing a regime-switching and a smooth transition model could better permit to get the non linear relationship between variables.
This research aims to analyze the problem using macroeconometric models not commonly used in literature. In particular, an analysis of non-linear relationships between variables can help to grasp how different shocks affected and will affect the labor share in different points in time. Furthermore, the models mentioned above will allow to understand whether a non-linearity is present in the stochastic or deterministic component of the series.
This project can be used to empirically justify theoretical explanations proposed to explain the falling labor share.