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Corporations are saving more and paying less

By July 27, 2012No Comments
Washington Post | July 27, 2012

The University of Chicago’s Loukas Karabarbounis and Brent Neiman have an interesting new working paper documenting how corporations have used their money from 1975 to 2007. The short version: corporations started saving more of their income, and paying less of it out in wages:

Source: Karabarbounis & Neiman
Source: Karabarbounis & Neiman

The authors find that the share of corporate income going to wages declined by 5 percent over those three decades. Interestingly, they found the phenomenon occurred worldwide, with similar patterns in the United States, Germany, Japan and China:


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