Globalisation, concentration and footloose firms: in search of the main cause of the declining labour share

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractOver the last two decades the share of national income which accrues to labour has followed a marked downward trend across a host of industrialised countries. This paper attempts to assess the importance of several potential causes of this phenomenon. We investigate compositional effects, the effect of declining trade costs, changes in the market structure (concentration) and the effect of low-wage competition between countries. Overall, the findings suggest that lower trade costs and factors related to economic integration such as industry concentration, the market power of firms and increased international low-wage competition indeed affect the labour share. However, their effect has been quite limited when compared to changes in the sectoral composition, the effects of technological change, cyclical factors and changes in the prices of intermediary goods.

The Labor Share Question in China

“…In addition, Berthold et al (2002) emphasizes the role of globalization on firms' substitution of capital for labor. Oyvat (2010), Schneider (2011), Hutchinson and Persyn (2012), Hogrefe and Kappler (2013) and Elsby et al (2013) confirms the negative effect of globalization with different datasets.…”

What Do We Know About the Labor Share and the Profit Share? Part II: Empirical Studies

“…The decline of the labor share of income in many countries has led many researchers to turn to technological progress as an explanation (IMF, 2007a;Bentolila and Saint-Paul, 2003;Arpaia et al, 2009;Driver and Muñoz-Bugarin, 2010;Jones, 2003, Ellis andSmith, 2007;Hutchinson and Persyn, 2009). Specifically, economists draw attention to the ratio between capital and labor measured in efficiency units, which has been steadily increasing since the 1980s (Bental and Demougin, 2010).…”

Labour Contribution and Productivity in the European Union: A Cluster Analysis

“…The findings of Hutchinson and Persyn (2012) suggest that lower trade costs and factors often associated with economic integration such as international low-wage competition and industry concentration have contributed to the decline in the labour share. One of the recent study conducted by Bassanini and Manfredi (2012) for 25 OECD countries, 20 business-sector industries and covering up to 28 years, indicated that total factor productivity growth and capital deepening jointly account for as much as 80% of the within-industry contraction of the labour share.…”