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The Micro-Level Dynamics of Declining Labour Share: Lessons from the Finnish Great Leap

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  • Tomi Kyyrä
  • Mika Maliranta

Abstract

In contrast with the experiences of the UK and the US, the distribution of labour and capital income has changed sharply in favour of capital in most Continental European and Nordic countries during the past two decades. We examine forces behind the evolution of the aggregate labour share by analysing the dynamics of labour shares within and between firms/plants in the Finnish business sector. Using a decomposition method applied in labour economics and productivity analysis, we show that much of the decline in the aggregate labour share stems from the reallocation of resources between firms and plants, while labour shares at the firm/plant level have remained relatively stable.

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Bibliographic Info

Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 406.

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Date of creation: 21 Nov 2006
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Handle: RePEc:fer:dpaper:406

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Keywords: Factor income shares; wage policy; decomposition; productivity;

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References

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Citations

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Cited by:
  1. Tuomas Kosonen, 2007. "The Increased Revenue from Finnish Corporate Income Tax in the 1990s," Discussion Papers 421, Government Institute for Economic Research Finland (VATT).
  2. Böckerman, Petri & Laaksonen, Seppo & Vainiomäki, Jari, 2009. "Micro-level Rigidity vs. Macro-level Flexibility: Lessons from Finland," MPRA Paper 15061, University Library of Munich, Germany.
  3. Jakub Growiec, 2009. "Determinants of the Labor Share: Evidence from a Panel of Firms," National Bank of Poland Working Papers 69, National Bank of Poland, Economic Institute.
  4. Marja Riihelä & Risto Sullström & Ilpo Suoniemi, 2008. "Tax Progressivity and Recent Evolution of the Finnish Income Inequality," Discussion Papers 460, Government Institute for Economic Research Finland (VATT).
  5. Jalava, Jukka & Aulin-Ahmavaara, Pirkko & Alanen, Aku, 2007. "Intangible Capital in the Finnish Business Sector 1975-2005," Discussion Papers 1103, The Research Institute of the Finnish Economy.

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