Life Expectancy and the Labor Share in the U.S.

By Michael Cauvel, Miguel Alejandro Sanchez

PKES Working Paper 2308

June 2023

We estimate the relationship between life expectancy and the labor share in the U.S., finding a positive and significant relationship. We then explore eight potential channels through which the labor share may impact life expectancy: social capital, policy, mental health, stress, crime, childhood adversity, healthcare utilization, and education. Our results suggest that healthcare utilization and education are two important channels linking life expectancy and the labor share. We expect that these relationships are driven by dynamics related to Baumol's cost disease. We also find evidence of a third channel related to policy, suggesting that rising inequality has resulted in policies that are less conducive to growth in life expectancy.

Keywords: Labor share, life expectancy, Baumol's cost disease

JEL classification: E25 I14 I24