How Has the Globalization of Labor Affected the Labor Income Share in Advanced Countries?

Jaumotte, Florence; Tytell, Irina

doi:10.5089/9781451868616.001

Cited by 86 publications

(83 citation statements)

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“…The same holds for Checchi and Garcia-Penalosa (2010), who find a higher importance of institutions on the labor share, but only estimate on the country level. Other studies, such as Harrison (2002), Guscina (2007), Jaumotte and Tytell (2008), the European Commission (2007), and Jayadev (2007) investigate the impact of different openness indicators on the labor share and find negative influences of increasing economic integration on the labor share. The European Commission (2007) also include the investigation of several skill groups and find heterogeneous results by skill for most variables.…”

Section: Introductionmentioning

confidence: 99%

Bargaining, Openness, and the Labor Share

Schneider¹

2011

SSRN Journal

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This paper investigates determinants of changes of the labor share in developed countries with a focus on Western Europe. Using a country-industry panel that covers the private sector, the paper focuses on long and short-run changes within industries. The results show a large and time-persistent impact of increasing globalization on the labor share, especially if the within-industry changes are considered. Openness seems to be the driving force for downward movements in the industry level labor shares while technological and institutional forces impact these shares positively. Furthermore, while investments into information and communication technology (ICT) increase productivity of workers, it has a negative impact on the labor share as it enables higher economic integration which lowers the labor share. Economic integration has stronger impact on the polarization in Western European labor markets than ICT.

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Section: Introductionmentioning

confidence: 99%

Bargaining, Openness, and the Labor Share

Schneider¹

2011

SSRN Journal

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“…While previous studies examining the impact of globalisation on the labour share tend to focus on the increasing role of emerging economies such as China and India in world trade (e,g., Jaumotte and Tytell (2007); Guscina (2007)), intra-EU trade accounts for approximately two thirds of all EU trade 2 .…”

Section: Introductionmentioning

confidence: 99%

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

Hutchinson

Persyn

2011

Rev World Econ

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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.

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“…An early study by Harrison (2002) shows negative effects of increasing trade openness and occurences of exchange rate crises for a large sample of developing and developed countries. Jaumotte and Tytell (2007) add further measures of globalisation including immigration and also establish a negative link. However, the effect of increased trade openness also features a certain degree of heterogeneity with respect to time, regional aspects and measurement.…”

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The labour share of income: heterogeneous causes for parallel movements?

Hogrefe

Kappler

2012

J Econ Inequal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10024.pdf Non-technical summaryDeclining labour shares in a large number of countries, particularly in continental Europe, have renewed the academic and political debate about the factors which explain these downward trends. While the share accruing to labour in the division of national income was long being seen as constant over time, this stylised fact has recently been challenged. Several explanations for temporal and persistent movements of the labour share have been brought forward in the debate: effects of structural and technological change, influences of globalisation and increased product market integration, and the importance of institutional settings, often with a focus on wage bargaining structures.The aim of this paper is to take a structured empirical approach at assessing the relative importance of those factors across countries. In particular, we focus on proper dynamic model specification and test the validity of the homogeneity assumption of slope coefficients frequently implied in previous studies. We employ fixed effect estimators as well as pooled mean group and mean group estimators, the latter two in a dynamic heterogeneous panel framework.In a sample of OECD countries, we find negative effects for two explanatory variables of the labour share: the capital output ratio and trade openness. Furthermore, we are not able to reject the homogeneity assumption on the slope coefficients. This first finding lends important support to the standard theory on labour share movements. However, as far as other explanatory variables often found in the literature go, the picture is more mixed. Total factor productivity, in particular, is found to exert heterogeneous effects across countries and no clear support for the pooling assumption of slope coefficients in a linear dynamic model is found.In order to add more detail to our analysis and to address the role of institutional arrangements, in particular with respect to the bargaining process, we split the sample into two groups of countries characterised by differently strong unions. We find important differences in the coefficient values and levels of significance. For more marketoriented countries with lower union density, we see the labour share being driven down by variables capturing technological change and shifts in the relative usage of factors of production. For countries with strong unions, however, we find ...

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How Has the Globalization of Labor Affected the Labor Income Share in Advanced Countries?

Cited by 86 publications

References 24 publications

Bargaining, Openness, and the Labor Share

Bargaining, Openness, and the Labor Share

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

The labour share of income: heterogeneous causes for parallel movements?

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