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The Impact of Financial Integration on the Labor Share of Income: An Empirical Evidence from a Panel Dataset

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  • Huong Le

    (Colorado State University
    Foreign Trade University)

Abstract

This paper contributes to the literature on the impact of financial liberalization by including the earnings of self-employed while investigating the core determinants and mechanisms driving the income share going to labor during financial integration. The question of the precise impact of liberalization on the share of the self-employed has received less attention in the literature. The author also uses both measures of capital account openness: de jure and de facto indicators. The empirical work is applied for a panel dataset of 30 countries during the period of 1970–2013. Despite using different measurement methods of financial openness, the results from all specifications support the hypothesis that financial integration leads to a decline in the labor share of income for the all countries sample.

Suggested Citation

  • Huong Le, 2020. "The Impact of Financial Integration on the Labor Share of Income: An Empirical Evidence from a Panel Dataset," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(3), pages 597-627, September.
    • Handle: RePEc:spr:ijlaec:v:63:y:2020:i:3:d:10.1007_s41027-020-00234-5
    DOI: 10.1007/s41027-020-00234-5
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    More about this item

    Keywords

    Labor share of income; Financial openness; Self-employed workers;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F6 - International Economics - - Economic Impacts of Globalization
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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