• Thematic Paper
    • EN
21.10.2020 71

The day after #12 - Changing shares of labour and capital incomes: what implications for investors?

Published October 21, 2020

> 10 minutes

> 10 minutes


The share of national income that is distributed to labour vs. capital has fallen to historically low levels in several advanced economies, such as the United States and the United Kingdom. We believe the Covid-19 crisis, along with other factors, will trigger a rebalancing in favour of labour over the next two decades. A reversion to the long-term average ratio of labour and capital in the share of income would probably enhance social and political stability, and would better fit with a consumer-driven growth model. This would be positive for investors if it happens smoothly over a long period. However, such a rebalancing of the equilibrium will be inflationary in nature, with negative implication for assets with stable income streams. Both parameters should be included in the long-term asset returns assumptions used in our strategic asset allocation.


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