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Globalization and Labor Force Participation

Author

Listed:
  • Beck, Stacie

    (University of Delaware)

  • Park, Soodong

    (University of Delaware)

Abstract

This study finds evidence that globalization depresses labor force participation via social spending and tax policy. We estimate a panel Vector Auto Regression model on data over the period of 1980~2012 from the 26 OECD countries. Social spending has increased, consistent with the compensation hypothesis, while labor income taxes have risen relative to capital income taxes, consistent with tax competition hypothesis. As a result, one can see the reduction of labor force participation. Social safety nets and tax policies need to be streamlined upon globalization.

Suggested Citation

  • Beck, Stacie & Park, Soodong, 2018. "Globalization and Labor Force Participation," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 33(3), pages 433-465.
    • Handle: RePEc:ris:integr:0748
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    Cited by:

    1. Malayaranjan Sahoo & Narayan Sethi, 2023. "An Empirical Insight into the Financial Globalization–Growth Nexus via Trade Openness: Evidence from Select South Asian Countries," Global Business Review, International Management Institute, vol. 24(2), pages 317-334, April.

    More about this item

    Keywords

    Fiscal policy; Globalization; Labor force participation; Tax competition; Compensation hypothesis; Panel VAR;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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