Advanced Search
MyIDEAS: Login to save this article or follow this journal

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

Contents:

Author Info

  • Jan Hogrefe

    ()

  • Marcus Kappler

    ()

Abstract

The distribution of factor incomes from a macroeconomic perspective is an increasingly popular research topic—be it for its implications for the personal income distribution or the apparent mistake in previous research declaring it to be constant over time. The labour share has been decreasing across OECD countries since the 1980s, sparking a renewed interest in what is behind this trend. The aim of this paper is to take a systematic approach to estimating the coefficients of factors explaining these movements 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 in a dynamic heterogeneous panel framework. We find support for a dynamic estimation setup and derive statements regarding the homogeneity assumption with respect to the three most prominent explanatory variables in the literature: the capital-output ratio, total factor productivity and trade openness. We find the first two variables to decrease the labour share, to be better captured by dynamic estimators and to be better identified in more recent time periods. With regard to trade, we see it depressing the labour share since 1980 only. We furthermore provide evidence on increased cross-country homogeneity over time for all of the analysed driving forces of the labour share. Copyright Springer Science+Business Media, LLC. 2013

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hdl.handle.net/10.1007/s10888-012-9221-8
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Springer in its journal The Journal of Economic Inequality.

Volume (Year): 11 (2013)
Issue (Month): 3 (September)
Pages: 303-319

as in new window
Handle: RePEc:kap:jecinq:v:11:y:2013:i:3:p:303-319

Contact details of provider:
Web page: http://springerlink.metapress.com/link.asp?id=111137

Related research

Keywords: Factor income; Labour share; Dynamic heterogeneous panel models; C23; E23; E25; F16;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
  2. Blanchard, Olivier J & Giavazzi, Francesco, 2001. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labour Markets," CEPR Discussion Papers 2713, C.E.P.R. Discussion Papers.
  3. Damiaan Persyn & John Hutchinson, 2009. "Globalisation, concentration and footloose firms: in search of the main cause of the declining labour share," LICOS Discussion Papers 22909, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  4. Daniele Checchi & Cecilia García-Peñalosa, 2008. "Labour market institutions and income inequality," Economic Policy, CEPR & CES & MSH, vol. 23, pages 601-649, October.
  5. Kei-Mu Yi, 2000. "Can vertical specialization explain the growth of world trade?," Staff Reports 96, Federal Reserve Bank of New York.
  6. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, 07.
  7. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
  8. Alfonso Arpaia & Esther Pérez & Karl Pichelmann, 2009. "Understanding Labour Income Share Dynamics in Europe," European Economy - Economic Papers 379, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  9. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Dario JUDZIK & Hector SALA, 2013. "Productivity, deunionization and trade: Wage effects and labour share implications," International Labour Review, International Labour Organization, vol. 152(2), pages 205-236, 06.
  2. Claudia Busl & Atilim Seymen, 2013. "(Spillover) Effects of Labour Market Reforms in Germany and France," WWWforEurope Working Papers series 8, WWWforEurope.
  3. Busl, Claudia & Seymen, Atılım, 2013. "The German labour market reforms in a European context: A DSGE analysis," ZEW Discussion Papers 13-097, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:kap:jecinq:v:11:y:2013:i:3:p:303-319. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.